USD/CAD : Breakout
(Wed, 3 Feb 2021). The Canadian Dollar is down more than 0.35% against the US Dollar since the start of the week with USD/CAD testing long-term slope resistance into the February open. Loonie is carving the weekly opening-range just below and we’re looking for a breakout in the days ahead for guidance. These are the updated targets and invalidation levels that matter on the USD/CAD price charts.
CANADIAN DOLLAR PRICE CHART – USD/CAD DAILY
Technical Outlook: In last month’s Canadian Dollar Price Outlook we noted that USD/CAD, “carved out a well-defined monthly opening-range just above major lateral support. From a trading standpoint, a good zone to reduce short-exposure / lower protective stops – look for inflection here…” Level in focus was 1.2579-1.2619 – a region defined by the 2018 objective yearly open and the 78.6% retracement of the 2017 advance. Loonie tested this threshold in late January before rebounding sharply with the subsequent rally taking out multi-month downtrend resistance last week.
The advance is now testing basic trendline resistance extending off the March 2020 highs – this slope has capped the rally for the past four sessions and a breach / close above is needed to fuel the next leg higher in USD/CAD. Daily support rests with 61.8% Fibonacci retracement / yearly open at 1.2700/13 – losses should be capped by this zone IF price is indeed heading higher.
CANADIAN DOLLAR PRICE CHART – USD/CAD 120MIN
Notes: A closer look at Loonie price action shows USD/CAD trading within the confines of an ascending pitchfork formation extending off the January lows with the weekly opening-range taking shape just below the March trendline. Weekly open support rests at 1.2782 backed by 1.2735 & the 1.27-handle- both zone of interest for possible downside exhaustion. A topside breach keeps the focus on the November lows at 1.2928 backed by the 2020 yearly open / the September lows at 1.2975/94- look for a larger reaction there IF reached.
Bottom line: The Canadian Dollar has carved a weekly opening-range just below long-term downtrend resistance and we’re looking for inflection here. From at trading standpoint, look for downside exhaustion ahead of 1.27 with a breach / close above 1.2975/94 needed to suggest a more significant low is in place. Review my latest Canadian Dollar Weekly Price Outlook for a closer look at the longer-term USD/CAD technical trade levels.
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