- USD/CAD holds key range below multi-month slope resistance- levels to know
- Check out our 3Q projections in our Free DailyFX Trading Forecasts
- Join Michael for Live Weekly Strategy Webinars on Mondays at 12:30GMT
The Canadian Dollar has remained rather resilient in the face of US Dollar strength this week with USD/CAD holding below a key technical resistance confluence we’ve been tracking for months now. Here are the updated targets and invalidation levels that matter on the USD/CAD charts into the start of November trade. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.
New to Forex Trading? Get started with this Free Beginners Guide
USD/CAD Daily Price Chart
Technical Outlook: Earlier this month we noted that USD/CAD was approaching a critical weekly resistance range at 1.3130/55 – “a region defined by the yearly high-week reversal close, the 61.8% retracement of the June decline and parallel resistance.” This threshold has continued to cap advances for the past four days with major event risk on tap into the close of the week. A breach / close above is needed to keep the long bias viable heading into the start of November trade with such a scenario targeting the 100% extension at 1.3206 backed channel resistance / 78.6% retracement at 1.3257.
Learn how to Trade with Confidence in our Free Trading Guide
USD/CAD 240min Price Chart
Notes: A closer look at price action sees USD/CAD still trading within the confines of the ascending pitchfork formation we’ve been tracking since last week. Note that the median-line converges on the 1.3130/55 resistance zone into the close of the month and further highlights the technical significance of this key region. Interim support rests with the trendline confluence just lower at 1.31 with a break below 1.3067/76 needed to suggest that a near-term high is in place- weakness beyond this region exposes 1.3015 and the 50% retracement at 1.2971. Broader bullish invalidation rest at ~1.2926 where the 200-day moving average converges on the 61.8% retracement of the October range.
Even the most seasoned traders need a reminder every now and then- Avoid these Mistakes in your trading
Bottom line: Heading into the November open the focus remains on a reaction off key resistance here at 1.3130/55 with the weekly opening-range taking shape just below- watch the break for guidance with the broader long-bias sub-1.3155. From a trading standpoint, I’ll favor fading weakness near-term while below this level with a break below this formation needed to fuel a larger correction in price. Keep in mind we get the release of Canada Employment figures & US Non-Farm Payrolls (NFP) on Friday – expect volatility into the close of the week.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
USD/CAD Trader Sentiment
- A summary of IG Client Sentiment shows traders are net-short USD/CAD – the ratio stands at -1.78 (36.0% of traders are long) – bullishreading
- Traders have remained net-long since October 9th; price has moved 1.3% higher since then
- Long positions are0.9% higher than yesterday and 8.4% higher from last week
- Short positions are unchanged from yesterday but 13.7% lower from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USD/CAD prices may continue to rise. Yet traders are less net-short than yesterday & compared with last week and the recent changes in sentiment warn that the current USD/CAD price trend may soon reverse lower despite the fact traders remain net-short.
See how shifts in USD/CAD retail positioning are impacting trend- Learn more about sentiment!
Relevant USD/CAD Data Releases
Economic Calendar – latest economic developments and upcoming event risk. Learn more about how we Trade the News in our Free Guide!
Active Trade Setups
- Gold Price Outlook: XAU/USD Bulls Face First Test of Uptrend Support
- NZD/USD Price Outlook: Kiwi Carries Breakout Potential
- EUR/USD Price Outlook: Euro Sell-off Intensifies– Support In View
- GBP/JPY Price Outlook: Bears Pound Support to Fresh Lows
- Crude Oil Price Outlook: WTI Breakdown Testing Initial Support
– Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex or contact him at firstname.lastname@example.org