In this article we will talk about Crude oil and USDCAD + their relationship, from technical point of view and from Elliott wave perspective.
Crude oil has been trading bearish since March this year, but we see it now finishing a leading diagonal pattern from the highs with potentially completed 5th wave that can cause a new corrective rally at the end of 2022 into 2023 back towards 100 resistance area.
We know that Crude oil is in negative correlation with USDCAD currency pair due to huge oil reservers in Canada. So, if Crude oil is about to stabilize, which can be already happening with a recent turn up, then USDCAD could stops at current 1.36 resistance and potential face more weakness, especially if pair drops back beneath 1.3400 level, while it’s below 1.39 invalidation level. Keep in mind that even if recovery on crude is going to be in three waves, that’s still only wave A from the low, so more upside after B into C, can make CAD stronger as shown on correlated chart below.