Canadian Dollar Traders Perfectly Predict USDCAD Breakout, Pullback

USDCAD – Our forex market sentiment indicator has arguably performed best in the USDCAD as of late, as flips from long to short and vice versa have accurately forecasted price moves in the Canadian currency pair. The ratio of long to short positions in the USDCAD currently rests at a nearly-neutral 1.25 as only 56 percent of traders are long. Yet last week we actually saw that traders became net short the USDCAD for the first time in nearly two years—perfect signal to go long the USDCAD. What happened next was nothing short of impressive, as the currency pair very clearly broke out to the topside. More recently, traders once again grew net-long the USDCAD, and the USDCAD saw a noteworthy pullback. The fact that positioning stands very near neutral territory suggests that we may have to wait until further flips in our SSI ratio or greater extremes to have confidence in our USDCAD forecasts. The current SSI ratio nonetheless gives us a moderately bearish bias on the USDCAD forex pair. Such an assessment is consistent with our technical analyst’s prediction that the USDCAD could fall to 1.0445.