(MENAFN- DailyFX) USD/CADeyeing resistance near two-month highs- looking for a reaction at 1.3338/55 Check out our 2019 projections in ourFree DailyFX US Dollar Trading Forecasts Join Michael for Live Weekly Strategy Webinars onMondays at 12:30GMT
TheCanadian Dollaris down more than 2.4% against theUS Dollarsince the July lows in USD/CAD with price now approaching a key inflection zone just higher. These are the updated targets and invalidation levels that matter on the USD/CAD charts this week.Review this week's Strategy Webinarfor an in-depth breakdown of thissilver pricesetup and more.
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Loonie Price Chart – USD/CAD Daily
Chart Prepared byMichael Boutros , Technical Strategist;USD/CAD on Tradingview
Technical Outlook: In my lastUSD/CAD Weekly Trade Outlookwe noted that price was approaching a key resistance zone, 'at the 61.8% retracement of the May decline / 2019 high-week close at 1.3355/70 backed by the trendline confluence around ~1.3430s- a weekly close above this level would be needed to suggest a larger price reversal is underway.' USD/CAD has failed just ahead of this threshold early in the month with price trading in a near-term consolidation just below- note the building divergence / pending support trigger on the daily momentum profile.
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Loonie Price Chart – USD/CAD 240min
Chart Prepared byMichael Boutros , Technical Strategist;USD/CAD on Tradingview
Notes: A closer look at Loonie price action sees USD/CAD trading within the confines of an ascendingpitchfork formationextending off the July lows with the upslope further highlighting the 1.3338/55 resistance zone – looking for a pivot off this zone.
A topside breach / close above exposes the 75% parallel (currently ~1.3390s) backed by the 2017 open / 61.8%retracementat1.3435/37 - expect a larger reaction there IF reached. Weekly open support rests at 1.3270 backed by the sliding parallel just lower – weakness beyond this threshold would suggest a more significant near-term high is in place / a more significant correction is underway with such a scenario targeting the monthly open at 1.3191.
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Bottom line: USD/CAD is targeting uptrend resistance just higher and we're looking for a reaction on a stretch into 1.3338/55. From a trading standpoint, a good level to reduce long-exposure / raise protective stops. Price is poised to mark an outside-day reversal into the highs if price continues course - often a warning sign of possible near-term exhaustion. Ultimately a topside breach / close above would be needed to mark resumption of the broader uptrend.
Loonie Trader Sentiment – USD/CAD Price Chart
A summary ofIG Client Sentimentshows traders are net-short USD/CAD - the ratio stands at -1.6 (38.4% of traders are long) – bullish reading Traders have remained net-short since July 23rd; price has moved 2.0% higher since then Long positions are 21.2% higher than yesterday and 5.4% lower from last week Short positions are 8.2% lower than yesterday and 5.9% higher from last week We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggestsUSD/CAD pricesmay continue to rise. Yettraders are 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 mixedUSD / CADtrading bias from a sentiment standpoint.
See how shifts in Silver retail positioning are impacting trend-Learn more about sentiment!
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Key US / Canada Data Releases
Economic Calendar- latest economic developments and upcoming event risk.
Active Trade Setups Silver Price Targets: XAG/USD Hits Trend Resistance at Yearly HighsUS Dollar Price Outlook: DXY Threatens Larger Recovery– Trade TargetsGold Price Targets: XAU/USD at Critical Resistance – Trade OutlookEuro Technical Price Outlook: EUR/USD Near-term Breakout ImminentAussie Price Outlook: Is the Australian Dollar Recovery Real?
- Written byMichael Boutros , Currency Strategist with DailyFX
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