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.
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.
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.