Canadian Dollar Nears a Range of Potential Support
As seen on the attached chart, the spot Canadian dollar reached a recent high on Oct. 20 of $0.812031 CAD/USD, while reaching a fresh low in its short-term downtrend on Dec. 2 at $0.779776 CAD/USD.
Nearby support is seen at $0.78 CAD/USD, with trade dipping below this level while closing above it in two of the past three sessions. Given a breach of this psychological support, we look to a range of support from August/September lows ranging from $0.774821 reached on Aug. 20 to $0.777671 CAD/USD reached on Sept. 20.
Within this range falls the horizontal red line at $0.775927 CAD/USD, which represents the 38.2% retracement of the move from the March 2020 low to the $0.832016 high reached on June 1. In theory, a sustained breach of this level would result in a continued slide to the 50% retracement at $0.758601 CAD/USD.
The lower study shows that after a brief four-week period where investors added to their bullish net-long position in Canadian dollar futures each week, this group moved back to a bearish net-short position as of Nov. 30 of 3,135 contracts. This bears watching when the CFTC releases updated statistics on Dec. 3.
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