USD/CAD Technical Analysis October 12, 2011

USD/CAD rose, and then fell during the session on Tuesday, forming a shooting star-shaped candle at the end of the session. The pair has recently fallen, and the shape of the candle suggests that trouble could be in store for this pair as the rally failed for the session.

We still see the parity level as a massive inflection point in this pair, and would be weary of selling this pair until we can break below that level. The oil markets will continue to hamper the moves of this pair, and oil is highly correlated to the value of the Canadian dollar. Because of this, anyone trading this pair will have to keep one eye on this chart, and another on the oil markets.

Technically speaking, it looks weak, but there are far too many reasons this pair could shoot back up for us to get bearish at this point. In the mean time, we find sitting still the way to go in this market.