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Crude Oil, CAD Technicals Point To Commodity Recovery

Published 2015-10-09, 02:59 p/m
Updated 2023-07-09, 06:31 a/m

As we might expect, the big decline in oil prices triggered a mirror-image reverse trend in USD/CAD as the Canadian dollar weakened at every down-step in the price of oil since July 2014.

Two Features Stand Out

1) IF, and only IF, crude has turned up for an intermediate-term recovery period, then the relationship with CAD should invert (already has) for the next several months (i.e- during the fall and winter months).

2) My technical work in USD/CAD (lower chart) shows what I think is a breakdown in the pair -- upside breakout in CAD -- from a rising-wedge formation, which the vast majority of the time is a trend-ending pattern.

Both the improving technical set-up in crude oil and the breakdown from the rising-wedge formation argue strongly that CAD is heading higher -- the USD/CAD is heading lower, with a next target zone of 1.2600-1.2550.

Crude Oil (T), USD/CAD

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