Canadian Dollar technical forecast: USD/CAD battle lines drawn

Canadian Dollar technical forecast: USD/CAD weekly trade levels

• Canadian Dollar reverses sharply off trend support
• USD/CAD marks outside-weekly reversal – range breakout pending
• Resistance 1.3545, 1.3685/91, 1.3881– support 1.3225, 1.3113 1.2990-1.3023(key)

The Canadian Dollar has been trading within a 3% range since the start of the year with USD/CAD setting the yearly opening-range lows at uptrend support. The February battle lines are drawn heading into Canada employment tomorrow. These are the updated targets and invalidation levels that matter on the USD/CAD weekly technical chart.

Discussing this USD/CAD setup and more in the Weekly Strategy Webinars beginning February 27^th.

Canadian Dollar Price Chart – USD/CAD Weekly

Chart Prepared by Michael Boutros, Technical Strategist; USD/CAD on TradingView

Technical Outlook: The Canadian Dollar has ben trading within the confines of an ascending pitchfork formation extending off the October 21’ and June 22’ lows (blue) with USD/CAD marking an outside-reversal candle off uptrend support last week. Price has been in a massive consolidation pattern since the September rally and we’re looking for a breakout in the days ahead to offer guidance here.

Initial resistance stands with the objective yearly open at 1.3545 backed by the yearly opening-range highs / 61.8% retracement of the October decline at 1.3685/91- a breach / weekly close above this threshold is needed to mark resumption towards the 2022 high-week close at 1.3881.

Initial support rests with the lower parallel and is backed closely by the 38.2% retracement of the 2021 advance at 1.3225. A break / weekly close below this threshold would threaten a larger correction towards the 52-week moving average at ~1.3113 and key support / bullish invalidation at 1.2990-1.3023- look for a larger reaction there IF reached.

Bottom line: A reversal off uptrend support keeps the focus on a breakout of the 1.3225-1.3545 range for guidance. From at trading standpoint, losses should be limited to the lower parallel IF price is indeed heading higher with a close above the 2023 open needed to challenge the yearly opening-range highs towards the 1.37-handle. I’ll publish an updated Canadian Dollar short-term outlook once we get further clarity on the near-term USD/CAD technical trade levels.

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--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com

Follow Michael on Twitter @MBForex