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The current U.S. session sell-off in WTI crude oil has brought confusion to the USD/CAD. While it is not uncommon for oil to play a major role in the valuation of the Canadian dollar, today’s action in WTI crude has given CAD holders ample reason for skepticism.

As of this writing, December WTI crude oil futures are down more than $1.25 per barrel on over 400,000 traded contracts.

Let’s dig into the technicals and see if we can identify a trade for the late U.S. forex session.

 

USD/CAD Technical Outlook

Today’s close will be instrumental in the trade of the USD/CAD for the rest of the week. Price is very near flat, and if it closes even, it will mark the second completed Doji candlestick in three sessions.

USD/CAD, Daily Chart

Viewing the daily timeframe, it is apparent that trade is consolidating between the yearly 38% and 50% Fibonacci retracement levels. This is a 204 pip spread, constituting the trading range of the last three weeks.

For the remainder of today's session there are a few important areas to be aware of:

• Support(1): Daily SMA, 1.2707

• Support(2): Bollinger MP, 1.2687

• Resistance(1): 38% current wave, 1.2761

• Resistance(2): 50% retracement of yearly range, 1.2926

Bottom Line: The USD/CAD has already tested topside resistance earlier in the session. For the remainder of the trading day, I will be buying support at the Daily SMA of 1.2707-10. A tight 1:1 R/R scalping approach looking for an 11-15 pip profit is an affordable way to play continued rotation.

As always, trade smart and for tomorrow!