The prospect of $50.00 WTI crude oil is not being kind to the Canadian dollar. In the midst of the fall sell-off, the USD/CAD has rallied north of the 1.3300 handle from 1.3000. If there was any doubt before, the performance of the Canadian dollar is certainly joined at the hip with WTI crude oil valuations.
Last Friday brought several primary market drivers facing the USD/CAD. Canadian CPI (Oct.) came in at 0.3%, well above the previous release and expectations. The news should have brought some strength to the CAD. No such luck, as the Greenback has posted a solid three-day winning streak vs the Loonie.
At press time, the USD/CAD is challenging an established daily Double Top Pattern at 1.3317. In the event that the Double Top does not prove to be valid resistance, a test of yearly highs will become probable for coming sessions.
Here are two levels to watch for the near future:
- Resistance(1): Double Top Pattern, 1.3317
- Resistance(2): Yearly High/Double Top, 1.3385
Bottom Line: One day ahead of U.S. GDP (Q3), the Greenback is putting on a show against the majors. Gains are the order of the day vs the euro, British pound, and Japanese yen. A slumping WTI market is adding to the USD’s rally against the CAD.
A sell from the Yearly Double Top (1.3385) is an affordable way to fade the current bull run of the USD/CAD. Sells from 1.3379 produce a tight 30 pips using a 1:1 risk vs reward ratio and initial stop at 1.3409.