Canadian Dollar short-term outlook: USD/CAD moment of truth at yearly support
Canadian Dollar technical outlook: USD/CAD short-term trade levels
- Canadian Dollar rally halted at key technical pivot zone near 2023 extremes
- USD/CAD carves weekly opening range just above major support zone
- Resistance 1.3407, 1.3450, 1.3533/45 (key)– support 1.3279-1.3314 (critical), 1.3225, 1.3076
The Canadian Dollar offensive was once again halted at critical support near the yearly lows in USD/CAD with this week’s opening-range taking shape just above. The battle-lines are drawn into the close of the week as the bulls attempt to build off this key pivotal zone. These are the updated targets and invalidation levels that matter on the USD/CAD short-term technical charts.
Discuss this Canadian Dollar setup and more in the Weekly Strategy Webinars on Monday’s at 8:30am EST.
Canadian Dollar Price Chart – USD/CAD Daily
Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/CAD on TradingView
Technical Outlook: In last month’s Canadian Dollar short-term outlook we noted that, “the USD/CAD sell-off has responded to key support around the yearly lows- the focus is on this near-term recovery within the monthly downtrend. From a trading standpoint, look for a break of the weekly opening-range for guidance with the bears vulnerable while above 1.3279.” Price rallied more than 2.7% off the lows to complete a full 61.8% retracement of the entire March decline. The subsequent sell-off takes USD/CAD back into critical support at 1.3279-1.3315- a region defined by the November low-day close and the 2023 yearly close-low / low-day close. Once again, the risk for infection / price exhaustion into this key zone.
Canadian Dollar Price Chart – USD/CAD 240min
Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/CAD on TradingView
Notes: A closer look at Loonie price action shows USD/CAD reversing sharply off March downtrend resistance before rebounding off key support with the weekly opening-range taking shape just above. Initial resistance eyed at the April opening-range lows (1.3407) backed by the 38.2% retracement of the late-April decline / 200DMA at ~1.3450/54. Key resistance now stands with the 61.8% Fibonacci retracement / 2023 objective yearly open at 1.3533/45.
A break below this key support zone exposes the 38.2% retracement of the 2021 advance at 1.3225- a daily close below this threshold is needed validate a breakout of a multi-month consolidation formation / yearly opening-range with such a scenario threatening a more consequential correction towards the May 2022 swing high at 1.3076 and the 1.30-handle.
Bottom line: USD/CAD is once again testing key support near the yearly range-lows – risk for downside exhaustion / price inflection into this zone. From a trading standpoint, a good zone to reduce short-exposure / lower protective stops – the immediate focus is on a breakout of the weekly range for guidance. Ultimately, rallies should be limited to the yearly open for the monthly downtrend to remain viable. Review my latest Canadian Dollar weekly technical forecast for a look at the longer-term USD/CAD trade levels.
Key Economic Data Releases
Economic Calendar - latest economic developments and upcoming event risk.
Active Short-term Technical Charts
- British Pound short-term outlook: GBP/USD breakout faces BoE
- Euro short-term outlook: EUR/USD resistance on Fed- ECB, NFP on tap
- US Dollar short-term outlook: USD battle-lines drawn ahead of Fed
- Gold short-term price outlook: XAU/USD vulnerable to larger setback
- Australian Dollar short-term outlook: AUD/USD bears emerge
- Japanese Yen short-term outlook: USD/JPY bulls blocked by 135
--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.
Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.
The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account.
FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.
FOREX.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, 120 London Wall, London, EC2Y 5ET.
GAIN Global Markets Inc. has its principal place of business at 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA., and is a wholly-owned subsidiary of StoneX Group Inc.
© FOREX.COM 2024