Technical Outlook: I highlighted this setup earlier in the week with the breach & close above key resistance and the weekly opening range validating our topside bias. The rally turned just ahead of our secondary target at 1.3166 and while our broader outlook remains weighted to the topside, the immediate risk is for further weakness. Note that the USDOLLAR index (which does not include the loonie) also looks vulnerable here and general near-term weakness in the greenback could limit the topside for now.
Looking for near-term support at the confluence of median-line parallels just lower (~1.3050s) backed by more significant support into 1.2981/89. A break below this level puts us neutral with a close below trendline support / the weekly open at 1.2946 needed to shift the focus lower.
Bottom line: looking to buy pullbacks / long-triggers targeting subsequent topside objectives at 1.3166, the April highs at 1.3217 and key Fibonacci resistance at 1.3311/25. From a trading standpoint, heading into tomorrow’s CPI & Retail Sales releases a drop into the lower support targets on spike would offer an opportunity for long exposure with the risk for a final stretch into the upper parallels / an exhaustion-high before pulling back. We’ll be continuing to track this pair and other USD setups daily on SB Trade Desk.
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- A summary of the DailyFX Speculative Sentiment Index (SSI)shows traders remain net short USDCAD- the ratio stands at just -1.06 (48% of traders are long)-weakbullishreading
- Yesterday the ratio was 1.16 (54% of open positions were long); long positions are 12% lower thanyesterday and 8.3% below levels seen last week
- 2.4% lower than yesterday and 5.8% below its monthly average
- While flips from net-long to net-short are typically bullish, this is a relatively weak signal and we’ll look for building short-positioning in the days ahead to confirm a more significant advance