USDCAD lost 150 pips on the Monday as the pair capitalized on the surging oil prices. We anticipate the rising oil prices will continue to dip USDCAD. Oil and CAD are inversely correlated. We will analyze the H4 time frame for our short position.

- Market structure: The current structure on USDCAD is bullish on H4 but bearish on H1. Once it has breached its 1.2600 support level, we will form a bearish structure on H4. We will have to wait for a retracement at a resistance to short. Right now, USCAD is resting on the support level of 1.2600. Either it will push up till the minor resistance at 1.2660 to gain liquidity and then continue down.

- Trendline: Ascending trendline has been broken, inducing breakout sells on USDCAD. After the breakout sell, market continued plummeting with full bearish candles. It was immensely pressured by the bears, which made it challenging to take retracements. The trendline breakout sell is completely validated.

- Retracement: The golden retracement area of 75-78.6% stands at the 1.2600, where the market currently stands. This retracement is also in confluence with the support level. The reason being we are not going long here is that fact of fundamental view of the USDCAD, which has seen surging oil prices, in effect, dropping USDCAD. At this retracement, we will simply wait for the pullback and then take a short trade.

- EMA's: USDCAD is ranging between bearish EMA 50 and bullish EMA 200. EMA 50 was just broken recently and hasn’t been tested yet. On the other hand, we have EMA 200 resting lower from the support. It may tap the EMA 200 and pounce back up.

- RSI/CCI: Both the oscillators are in extended over sold conditions. RSI is at 33 and CCI at  -100, moving back up from the -165. There is no divergence on any of the oscillators. When market reaches the resistance level, we will see what the oscillators are reflecting at that time. If they stay below their neutralized levels, we have an added confirmation to go short.

USDCAD shorts from 1.2660

Aug 24 2021

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