USD/CAD is currently in a rebalancing phase after the strong downside correction seen over recent weeks. Following a rejection in the 1.3900–1.4000 supply zone, price retraced down to a major demand area between 1.3500 and 1.3650, where it has shown a notable bullish reaction. The pair is now trading at 1.3734, and multi-frame data suggests we are in a transitional phase—not yet a confirmed bullish trend reversal.
COT Report – Institutional Positioning
The latest Commitments of Traders data (June 10th) reveals critical signals:
Commercials (hedgers and large institutions) have aggressively increased their long exposure on CAD, adding +27,999 contracts. This indicates strong expectations of Canadian dollar appreciation—bearish implications for USD/CAD in the medium term.
Non-Commercials (speculators) reduced their short CAD exposure by -14,319 contracts, signaling that speculative players are starting to unwind long USD/CAD positions.
Overall, the net shift shows institutional sentiment turning bearish on the pair, potentially pointing to a deeper downside once the current technical pullback completes.
USD Index COT – Dollar Momentum Weakening
On the USD Index, Non-Comms have added +1,279 long contracts, but positioning remains moderate. Commercials are flat, suggesting the dollar lacks strong bullish backing. This makes any sustained USD/CAD rally structurally fragile.
Retail Sentiment
Retail traders are 57% short and 43% long on USD/CAD. Although not extreme, this imbalance suggests confidence among retail participants in a bearish move—often preceding a short-term upward squeeze before an eventual trend continuation.
We could therefore see price move toward 1.3900 as a liquidity grab, setting the stage for a larger reversal.
Technical Analysis – Outlook
Key highlights:
A strong bullish reaction occurred from the 1.3500–1.3650 demand zone, previously well-respected.
The weekly RSI is still below the 50-level but is turning upward—momentum is improving.
Price structure shows room for a pullback to the 1.3900–1.4000 supply zone, which aligns with higher-timeframe order blocks.
This zone remains a critical resistance, and unless the macro and positioning context changes, a renewed bearish impulse is expected from this area.
Trading Outlook
The current picture presents a tactical short-term long opportunity, followed by a potential structural short setup.
📈 Scenario 1 – Bullish Pullback (in play):
With price above 1.3700 and consolidating, there’s space for a rally toward the 1.3900–1.4000 supply zone. Ideal for short-term targets.
📉 Scenario 2 – Structural Short (priority bias):
Should price reach 1.3950–1.4000 and show bearish confirmation (e.g., engulfing, doji, rejection on H4/H1), this would be a prime area to initiate swing shorts, targeting 1.3600 and eventually 1.3450.
✅ Final Bias: Structural Bearish – Corrective Bullish
Watch for potential false breakouts above 1.3800–1.3900 to liquidate retail shorts before a more meaningful downside move. The sharp increase in commercial net long CAD positions supports a bearish USD/CAD bias for the coming weeks.
COT Report – Institutional Positioning
The latest Commitments of Traders data (June 10th) reveals critical signals:
Commercials (hedgers and large institutions) have aggressively increased their long exposure on CAD, adding +27,999 contracts. This indicates strong expectations of Canadian dollar appreciation—bearish implications for USD/CAD in the medium term.
Non-Commercials (speculators) reduced their short CAD exposure by -14,319 contracts, signaling that speculative players are starting to unwind long USD/CAD positions.
Overall, the net shift shows institutional sentiment turning bearish on the pair, potentially pointing to a deeper downside once the current technical pullback completes.
USD Index COT – Dollar Momentum Weakening
On the USD Index, Non-Comms have added +1,279 long contracts, but positioning remains moderate. Commercials are flat, suggesting the dollar lacks strong bullish backing. This makes any sustained USD/CAD rally structurally fragile.
Retail Sentiment
Retail traders are 57% short and 43% long on USD/CAD. Although not extreme, this imbalance suggests confidence among retail participants in a bearish move—often preceding a short-term upward squeeze before an eventual trend continuation.
We could therefore see price move toward 1.3900 as a liquidity grab, setting the stage for a larger reversal.
Technical Analysis – Outlook
Key highlights:
A strong bullish reaction occurred from the 1.3500–1.3650 demand zone, previously well-respected.
The weekly RSI is still below the 50-level but is turning upward—momentum is improving.
Price structure shows room for a pullback to the 1.3900–1.4000 supply zone, which aligns with higher-timeframe order blocks.
This zone remains a critical resistance, and unless the macro and positioning context changes, a renewed bearish impulse is expected from this area.
Trading Outlook
The current picture presents a tactical short-term long opportunity, followed by a potential structural short setup.
📈 Scenario 1 – Bullish Pullback (in play):
With price above 1.3700 and consolidating, there’s space for a rally toward the 1.3900–1.4000 supply zone. Ideal for short-term targets.
📉 Scenario 2 – Structural Short (priority bias):
Should price reach 1.3950–1.4000 and show bearish confirmation (e.g., engulfing, doji, rejection on H4/H1), this would be a prime area to initiate swing shorts, targeting 1.3600 and eventually 1.3450.
✅ Final Bias: Structural Bearish – Corrective Bullish
Watch for potential false breakouts above 1.3800–1.3900 to liquidate retail shorts before a more meaningful downside move. The sharp increase in commercial net long CAD positions supports a bearish USD/CAD bias for the coming weeks.
📈 Nicola | EdgeTradingJourney
Documenting my path to $1M in prop capital through real trading, discipline, and analysis.
Documenting my path to $1M in prop capital through real trading, discipline, and analysis.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
📈 Nicola | EdgeTradingJourney
Documenting my path to $1M in prop capital through real trading, discipline, and analysis.
Documenting my path to $1M in prop capital through real trading, discipline, and analysis.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.