USD/CAD Technical Outlook: Trade Setups for NFP, Canada Jobs

The Canadian Dollar has been gaining steam given a Mar annulment with a USD/CAD decrease now coming initial totalled targets. Key practice reports from both a U.S. and Canada are on daub tomorrow and while prices could see some upside from here, a broader opinion stays weighted to a downside.

USD/CAD Daily Price Chart

USD/CAD Price Chart - Daily Timeframe

Technical Outlook: Last month we highlighted a key annulment off connection insurgency in USD/CAD, changeable a concentration reduce price. The successive sell-off has damaged subsequent a Mar lows with a span now contrast halt support during 61.8% Fibonacci prolongation during 1.2752. Note that a focus behind subsequent a 2012 trendline (red) leaves prices exposed to serve waste while subsequent a late 2017 pitch highs.

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USD/CAD 240min Price Chart

USD/CAD Price Chart - 240min Timeframe

Notes: A closer demeanour during cost movement see’s USD/CAD trade within a proportions of a well-defined descending pitchfork formation with a reduce 50-line concentration on Fibonacci support currently during 1.2752. Note that we’ve noted some dissimilarity in intraday movement on this decrease and suggests cost might see some near-term liberation off this mark.

Interim insurgency stands during 1.2845 corroborated by 1.2890/95 with bearish cancellation set to a Oct high / slope connection during ~1.2916– a crack above this turn would risk a convene behind adult towards a high-day tighten during 1.3078 (not a adored scenario).

A mangle reduce from here targets dual vital support objectives during 1.2686/92 (where a 50% retracement converges on a 100-day relocating average) and 1.2634 (where a 100% prolongation converges on a 200-day relocating normal and slope support. we would be on a surveillance for a incomparable improvement off one of these levels.

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Bottom line: The medium-term opinion stays weighted to a short-side in USDCAD though prices are contrast near-term support forward of tomorrow’s eventuality risk. Keep in mind we get a recover of U.S. Non-Farm Payrolls and Canada Employment during a same time (8:30ET) with a eventuality expected to fuel combined sensitivity in a particular crosses. From a trade standpoint, I’ll preference vanishing strength while subsequent 1.2916 with a mangle of today’s low indispensable to fuel a subsequent leg down.

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USD/CAD IG Client Positioning

USD/CAD Client Sentiment

  • A outline of IG Client Sentimentshows traders are net-short USDCAD- a ratio stands during -1.46 (40.7% of traders are long) –weak bullishreading
  • Long positions are 4.4% aloft than yesterday and 11.1% reduce from final week
  • Short positions are 3.7% aloft than yesterday and 38.2% aloft from final week
  • We typically take a contrarian perspective to throng sentiment, and a fact traders are net-short suggests USDCAD prices might continue to rise. Traders are reduction net-short than yesterday though some-more net-short from final week. The multiple of stream positioning and new changes gives us a serve churned USDCAD trade bias from a view standpoint.

See how shifts in USD/CAD retail positioning are impacting trend- Learn some-more about sentiment!

Relevant Data Releases

USD/CAD Economic Calendar

Other Setups in Play

– Written by Michael Boutros, Currency Strategist with DailyFX

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