The USD/CAD has broken the Channel Up pattern’s support on the short-term 15-minute intraday time frame. The short time frame indicates near-term weakness; however, it’s the short time frames that offer the first look at what could possibly build into a longer-term move. The Initial Trend reading of seven bars confirms the strength of the uptrend, and combined with the Breakout reading of only one bar we should not expect the reversal to have much follow-through. The uptrend line broke at 1.0009 (S), and prices are now finding support at the parity level (1.000), where each U.S. Dollar exchanges for exactly one Canadian Dollar. This level is also the initial support of the Forecast area (F) at 1.0001 (the Forecast area extends down to 0.9992).
Price action on the USD/CAD has a strong correlation to crude oil, and the West Texas Intermediate (WTI) market is used as a benchmark in oil pricing. The 30-minute WTI chart (below) broke lower through a Channel Up pattern, triggering a short-sell as prices traded below 84.15 (S). This weakness in WTI will affect the value of the Canadian Dollar (also known as the “loonie”), so this breakdown on the WTI daily chart will likely cause the current support level on the USD/CAD, at 1.000, to hold – a weaker oil market means a weaker “loonie,” therefore pushing the USD/CAD’s chart higher. There is still some downside left in the WTI move, since prices have not yet reached the initial Forecast level at 83.52 (F); this bodes well for USD/CAD buyers, and for continued support at parity.
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