The US Dollar is down nearly 3% against the Canadian Dollar since the yearly highs registered last month with the decline now targeting the 2019 range-lows. These are the updated targets and invalidation levels that matter on the USD/CAD weekly chart. Review this week’s Strategy Webinar for an in-depth breakdown of this Loonie setup and more.
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USD/CAD Price Chart – Loonie Weekly
Notes: In my last USD/CAD Weekly Price Outlook we noted a key support zone, “around 1.3274– a break below this zone would suggest a larger correction is underway targeting 1.3052/99– look for a bigger reaction there IF reached.” Price marked an outside-weekly reversal to close below 1.3274 last week with price now probing four-month lows. Note that weekly RSI held sub-60 throughout the early-2019 advance and suggests the broader risk remains weighted to the downside from a momentum standpoint.
Key support remains at the yearly opening-range lows / 38.2% retracement at 1.3052/68 – ultimately a break below the 100% extension at 1.2969 is needed to suggest a more significant correction is underway. Interim resistance now stands back at 1.3274 with bearish invalidation now lowered to 1.3435/37.
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Bottom line:The focus remains on a drop towards key support at 1.3052/68 on the back of last week’s reversal. From a trading standpoint, look to reduce short-exposure / lower protective stops on a move towards the yearly range lows- look for a reaction there. We’ll favor fading weakness sub-1.3274 for now. Review my latest USD/CAD Technical Outlook for a closer look at the near-term Loonie trading levels.
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USD/CAD Trader Sentiment
- A summary of IG Client Sentiment shows traders are net-long USD/CAD – the ratio stands at +1.04 (51.1% of traders are long) – neutral reading
- Long positions are 7.1% higher than yesterday and 34.5% higher from last week
- Short positions are 6.0% lower than yesterday and 29.0% lower from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USD/CAD prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger USD/CAD-bearish contrarian trading bias from a sentiment standpoint.
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Key US / Canada Data Releases
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Previous Weekly Technical Charts
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— Written by Michael Boutros, Technical Currency Strategist with DailyFX
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