U.S. oil prices have dropped since the beginning of last week as oil stockpiles in the US rose significantly. The weakening demand can be attributed to the coronavirus pandemic and although U.S. refineries have only gradually returned to operations since storms caused shutdowns around the Gulf of Mexico region, U.S. crude inventories still rose to 2 million barrels and it is expected that oil will see a further slump in price next week.
Looking at US dollar versus the Canadian dollar above on the daily time frame, we can see price bottomed out around 1.30425 and plotting a fib from the opening candle of this week until the high, we’ve had a rejection off of the 61.8 which lines up with previous support and resistance shown by the highlighted region.
Dropping down to the 4-hour chart above, we can see that the highlighted region also illustrates a potential inverse head and shoulder pattern. We could see a push down into the right shoulder region again coinciding with a 3rd touch of the trend line but with the U.S. CPI numbers coming out positive it is unlikely that will be achieved. The right shoulder area would’ve offered the best risk to reward but dropping down to a lower time frames can offer more opportunity.
On the 30-minute chart above, we can see how there was a lower time frame move off the 61.8 as well as a break and retest of the counter trendline drawn where entries could have been scaled in. 1.32000 has proven to be a key level which could offer support if price can break and close above that area.
Remember to always use correlating pairs to your advantage and follow the fundamental events of the pairs you are trading to add confluence. Hit the subscribe button below to receive updates sent directly to your e-mail.