Crude oil remains in recovery mode after completing an ABC pullback around $74.50, and the price action leaves scope for further gains. The next upside areas referenced are $95 and, if momentum persists, the $100 region.
With energy trending higher, the Canadian dollar is framed as having supportive conditions, alongside a recent strong leg down in the US dollar. That backdrop aligns with a continued bearish bias in USDCAD, where the pair is described as being mid-way through a bearish impulsive cycle, with a possible short setup emerging after a fourth-wave rebound. Wave three is tentatively seen as nearing completion near the 161.8% extension, while rebound resistance is placed at 1.3840–1.3911, and the downside view is maintained while price remains below 1.4000.
Crude Oil Outlook and Market Dynamics
We are positioning for a strong continuation in crude oil as it clears key technical support. Having completed an ABC pullback near the $74.50 mark, we expect prices to march toward the $95 to $100 range in the coming weeks. This bullish momentum is highly credible, especially with recent energy market statistics showing consistent global crude inventory draws and ongoing supply management from major producing nations.
Implications for USDCAD and Trading Strategy
Because crude oil is Canada’s primary export, this energy rally is poised to give the Canadian dollar a significant boost. Historically, USDCAD shares a strong negative correlation with oil prices, meaning that as crude climbs, this currency pair tends to fall. This relationship is further strengthened by recent macroeconomic data indicating broad-based weakness in the greenback.
We suggest derivative traders look for shorting opportunities on USDCAD as it continues its bearish impulsive cycle. While the current downward wave may temporarily pause near the 161.8% Fibonacci extension, we anticipate a brief fourth-wave rebound. We should use any bounce into the 1.3840 to 1.3911 resistance zone to establish short positions, keeping a close eye on the key 1.4000 psychological ceiling as our line in the sand.
