USD/CAD Sets Support ahead of FOMC, NFP

Canadian Dollar Technical Forecast: USD/CAD Weekly Trade Levels

• Canadian Dollarupdated technical trade levels – Weekly Chart
• USD/CAD holds key technical support level- room for relief heading into November
• Weekly support 1.2314 (key), 1.22 – Resistance 1.2460, 1.27 (bearish invalidation)

The Canadian Dollar slipped for a second consecutive week against the US Dollar with USD/CAD up just 0.24% for the week. The advance comes despite a weekly range of more than 1% as price continues to hold just above a key lateral level we’ve been tracking for over a month now. These are the updated targets and invalidation levels that matter on the USD/CAD weekly technical price chart heading into the November open. Review my latest Strategy Webinar for an in-depth breakdown of this Loonie technical setup and more.

Canadian Dollar Price Chart – USD/CAD Weekly

Chart Prepared by Michael Boutros, Technical Strategist; USD/CAD on Tradingview

Notes:In my last Canadian Dollar Weekly Price Outlook we noted that USD/CAD had, “broken below multi-month uptrend support and threatens a larger correction in the weeks ahead.” We highlighted critical support at, “the 2018 low / 61.8% Fibonacci retracement of the yearly rangeat 1.2314/66. Both of these represent levels of interest for possible downside exhaustion IF reached.” Price briefly registered an intra-week low at 1.2288 last week before reversing sharply with USD/CAD trading just over 0.8% off the lows ahead of the close on Friday.

Weekly resistance now back at the2016 swing low / 100% extension of the August decline at 1.2460/62 with broader bearish invalidation now lowered to the 61.8% retracement / objective yearly open at 1.2696-1.27013. A break lower from here would threaten another bout of accelerated losses for the greenback with such a scenario exposing the 1.618% ext / 78.6% retracement at 1.2194-1.2208– look for a lager reaction there IF reached.

Bottom line: USD/CAD has been testing downtrend support for two weeks now and while the broader threat remains lower, a relief rally into the November open may be on the cards. From a trading standpoint, look for possible topside exhaustion ahead of the 52-week moving average IF price is indeed heading lower. Keep in mind we have the FOMC interest rate decision and October Non-Farm Payrolls (NFP) on tap next week into the November open- stay nimble here. Review my latest Canadian Dollar Price Outlookfor a closer look at the near-term USD/CAD technical trade levels.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Canadian Dollar Trader Sentiment – USD/CAD Price Chart

• A summary of IG Client Sentiment shows traders are net-long USD/CAD – the ratio stands at +2.40 (70.62% of traders are long) – typically bearish reading
• Long positions are2.03% lower than yesterday and 5.02% lower from last week
• Short positions are 3.35% higher than yesterday and 6.93% higher 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. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current USD/CAD price trend may soon reverse higher despite the fact traders remain net-long.

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— Written by Michael Boutros, Technical Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex