Canadian Dollar technical forecast: USD/CAD plunge searches support

Canadian Dollar technical forecast: USD/CAD weekly trade levels

• Canadian Dollar reverses from major trend resistance
• USD/CAD plunge now approaching trend support- bears on notice
• Resistance 1.3804, 1.3881, 1.3950/90 (key)– support 1.3491, 1.3400(key), 1.3225/46

The Canadian Dollar surged against the US Dollar this week with the USD/CAD plunging more than 2%. The decline marks a break of a multi-week range and the focus possible support along the 2021 uptrend. These are the updated targets and invalidation levels that matter on the USD/CAD weekly technical chart.

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Canadian Dollar Price Chart – USD/CAD Weekly

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

Technical Outlook: In our last Canadian Dollar Technical Forecast we noted that, “USD/CAD has broken out of the yearly opening-range with the advance now approaching longer-term resistance around the 2022 highs.” The level in focus was last year’s high-week close at 1.3881- the rally registered an intra-day high at 1.3862 that same week before reversing with a four-day sell-off breaking a multi-week range this week.

The immediate focus is on key support objectives just lower at the 61.8% Fibonacci retracement of the yearly range at 1.3491 and the yearly low-week close at 1.3400- both regions of interest for possible downside exhaustion / price inflection IF reached. Losses below these levels would threaten a test of the 38.2% retracement / 52-week moving average at 1.3225/46.

Resistance now stands with the yearly high-close at 1.3805 backed closely by the 2022 high-week close at 1.3881. Ultimately a breach / weekly close above 1.3950/90 is needed to mark resumption of the 2021 uptrend. This region is defined by the 1.618% Fibonacci extension of the 2021 advance, the 2022 swing high and the 2020 March reversal close.

Bottom line: USD/CAD has responded to confluence resistance and we’re looking for possible support along the broader uptrend. From at trading standpoint, look to reduce short-exposure / lower protective stops on a stretch towards the lower parallel- rallies should be capped by the 25% parallel (currently ~1.3680s) IF price is heading lower here. Note that we are heading the close of the week, month, and quarter – tread lightly here and stay nimble into the April open. Review my latest Canadian Dollar short-term outlook for a closer look at 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