(MENAFN- DailyFX) USD/CAD turns from critical resistance- price vulnerable sub-1.3132 Check out our 2018projections in our Join Michael for Live Weekly Strategy Webinars on The Canadian Dollar has finally caught a bid with USD/CAD reversing sharply off key confluence resistance this week. The pair remains vulnerable while below this threshold with the pullback in price now approaching near-term uptrend support-we're looking for further evidence that a more significant exhaustion high may be in place.
USD/CAD Daily Price Chart Technical Outlook: USD/CAD turned from a key resistance confluence this week at 1.3103/32- a region where the 100% extension of the September advance and the 61.8% retracement of the 2017 decline converges on the upper median-line parallel of the ascending . Note that daily RSI marked clear divergence into this high with a support trigger pending.
Near-term support rests with the 2017 January low at 1.2968 with a daily close below needed to suggest that a more significant high may be in place. Such a scenario would target the 2012 trendline which converges on the lows t 1.2803. A topside breach still has to contend with longer-term slope resistance just shy of 1.32.
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USD/CAD 240min Price Chart Notes: A closer look at USD/CAD price action shows the pair trading within the confines of a near-term ascending channel formation extending off the February lows. The near-term focus remains lower while below 1.3132 with subsequent support targets eyed at 1.2918- look for a reaction there. A break keeps the short-bias in play targeting the monthly open at 1.2829 backed closely by 1.2789.
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Bottom line: USD/CAD turned from critical confluence resistance this week and while the immediate focus is lower, we'll be looking for a break of this bullish formation to validate a larger reversal in price. From a trading standpoint, I'll favor fading strength while below the upper parallel. Keep in mind that we still have the release of the FOMC interest rate decision later today with Canada CPI on tap on Friday.
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USD/CAD IG Client Sentiment A summary of shows traders are net-short USDCAD- the ratio stands at -1.6 (39.1% of traders are long) weak bullishreading Traders have remained net-short since Mar 1st; price has moved 1.0% higher since then Long positions are 29.0% higher than yesterday and 6.0% higher from last week Short positions are13.8% lower than yesterday but 20.9% higher from last week We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USDCAD prices may continue to rise. However, retail is less net-short than yesterday but more net-short from last week and the combination of current positioning and recent changes gives us a further mixed USDCAD trading bias from a sentiment standpoint. See how shifts in USD/CAD retail positioning are impacting trend-
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- Written by Michael Boutros, Currency Strategist with DailyFX
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