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Loonie (CAD) Pressured after the Doha Summit

Pressure on Oil Price: The Doha summit did not result in any agreement to freeze global oil supply. This should build up pressure on oil prices. The loonie, or Canadian Dollar has a strong correlation to oil prices. We saw CAD fall across the board against most majors after the conclusion of the summit. Let's take a look at the USD/CAD.

USD/CAD 4H Chart 4/18

(click to enlarge)

Base Building within Downtrend: USD/CAD has been bearish but is trying to build a "base" above 1.2750. Heading into the weekend, it looks like it failed to breach 1.29, and was heading back to test the support pivot near 1.28. However, the event risk over the weekend propped up the pair above 1.29. During the Asian-European session, we saw the USD/CAD retreat.

Bullish Scenario: Now, I think there is still a chance that USD/CAD can build at least a short-term bottom. I think 1.2850 and 1.28 are key levels. If price can hold above 1.2850, there is a good chance that it can still make it back up to 1.30. However, there is a falling wedge resistance just above 1.30, so the bullish outlook might need to be held to the short-term for now. A break above 1.3050 for example, could signal a bullish outlook in the medium-term, with the 1.34 wedge high in play. 

Bearish Scenario: On the other hand, if price falls below 1.28, I would say that the bears are still in charge, and we should look for USD/CAD to challenge and perhaps take out the 1.2750 support as well.