The weekly Baker-Hughes U.S. Rig Count is in ― drumroll please ― there are currently 180 active U.S. oil rigs in operation, down from 181 last Friday. In short, the American fracking industry continues to consolidate amid an unprecedented credit crunch. However, WTI prices are holding firm just north of $40.00 per barrel, sustaining the rally from last April.

For WTI futures, trading volumes have rolled from the August contract to the September issue. The spread between the two is $0.18, with both contracts off slightly on the day. As we roll toward August, the super contango of last spring is gone with deferred contracts trading at much tighter premiums.

Following the Baker-Hughes report, the USD/CAD appears at ease with WTI crude oil gaining a foothold at $40.00. Let’s dig into the technicals for this pair and see if it’s ready to break out.

Baker-Hughes Falls, USD/CAD Holds The Line

For the second consecutive week, the USD/CAD is in deep consolidation. Rates just can’t seem to stray from the 1.3575 level.

Right now, it doesn’t look like the Loonie is interested in moving much anywhere. However, there are two levels worth watching for next week’s trade:

• Resistance(1): Bollinger MP, 1.3753
• Support(1): 78% Fibonacci Retracement, 1.3327

Overview: Until proven otherwise, playing rotational strategies in the USD/CAD is the way to go. In order to do this, simply sell topside resistance and buy downside support. Keep profit targets and stop losses modest, no more than 25 pips.

For the U.S. shale industry, things don’t look good. On the bright side, at least today’s Baker-Hughes figure fell by only one oil rig. If nothing else, the industry contraction may be approaching its bottom.