Prepping major trades on bullish Canadian Dollar outlook

The Canadian Dollar rallied on Friday following positive retail and core retail sales figure with a 0.2% and 0.9% respective increase.

From a technical standpoint, the USDCAD is right on track in this consolidation move as it currently rebounds off of the second resistance level I established a while back.

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USDCAD 4-Hour

I kept both resistance lines for the time being, but it is quite clear that the upper one demonstrates much greater strength than the lower one. From a technical standpoint, this short entry is optimized enabling us to place a much tighter spread than before.

Additionally, my short position is supported by an overall increase in net longs found on the Commitment of Trader report for this week ending.

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COT Report: Canadian Dollar

Looking at the non-commercial positions, a very nice net change of 2,882 new net long contracts and a 1,883 unload of net short positions. This signals larger institutional traders are becoming more bullish of the Canadian Dollar.

For the week ahead, I don’t see any likeliness of a breakout from this consolidation. Given the current resistance level and modestly positive Canadian retail sales figures, USDCAD currently remains a shorting opportunity for me upon market open next week.

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