USD/CAD Weekly Price Outlook: US Dollar Rallies To Fresh Yearly Highs
In this series, we scale-back and look at the broader technical picture to gain a bit more perspective on where we are in trend. The US Dollar has rallied to fresh yearly highs against the Canadian Dollar with and a weekly close above near-term resistance is needed to keep the long-bias viable. Here are the key targets & invalidation levels that matter on the USD/CAD weekly chart heading into the close of the year.
USD/CAD WEEKLY PRICE CHART
(Click on image to enlarge)
Notes: USD/CAD is trading into a key resistance zone at 1.3375-1.3435- a region defined by the 50% retracement of the 2016 decline, the June swing highs and the 2017 yearly open. A breach/weekly close above this threshold is needed to keep the immediate long-bias viable with such a scenario targeting key confluence resistance at 1.3628/86 where the 61.8% retracement and the 1.618% extension converge on the 2017 high-week close. Key support rests at 1.3100/30 with a break below the 2012 trendline / 200-week moving average around ~1.30 needed to invalidate the long-bias.
Bottom line: The advance is vulnerable near-term while below 1.3435. From a trading standpoint, a good place to reduce long-exposure / raise protective stops. For now, our focus will be on the weekly close. I'll publish an updated USD/CAD scalp report once we get further clarity on near-term price action.
USD/CAD TRADER SENTIMENT
- A summary of IG Client Sentiment shows traders are net-short USD/CAD - the ratio stands at -4.69 (17.6% of traders are long) – bullish reading.
- Traders have remained net-short since October 9th; price has moved 4.7% higher since then
- Long positions are 6.3% lower than yesterday and 33.5% lower from last week
- Short positions are 25.9% higher than yesterday and 59.6% higher 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. Traders are further net-short than yesterday & last week, and the combination of current sentiment and recent changes gives us a stronger USD/CAD-bullish contrarian trading bias.
Disclosure: Do you want to see how retail traders are currently trading the US Dollar? Check out our IG Client Sentiment ...
more