Todays Move in WTI Crude could Mean Trouble for the Canadian Dollar

Crude broke out above the downward sloping trendline of a triangle today. However, it also closed down 0.28% on the day.  After breaking out, Crude turned lower on the day and moved back into the triangle, in negative territory for the day.  This candlestick is a doji candle and is considered to be a candle of indecision.

Source: Tradingview. City Index

In contrast, USD/CAD continued its moved lower today (CAD higher) from the bearish engulfing candle put in last week.   The pair is hovering around the 61.8% retracement level near 1.3148 from the July 19^th lows to the September 3^rd highs.  Trendline support comes in roughly 50 pips lower near 1.3100.

Source: Tradingview, City Index

Crude and CAD typically move together, that is, when crude trades lower, USD/CAD trades higher (CAD lower).  However today, as Crude reversed lower, CAD did not.  To better illustrate this, below is a chart of WTI Crude and Canadian Dollar Futures (the futures trade in the same direction as Crude, as opposed to USD/CAD which trades inversely to crude).  The correlation coefficient for the two assets is currently +.62.

Source: Tradingview, City Index

What happens tomorrow if Crude reverses its recent move higher and trades lower back into the triangle?  The Canadian Dollar may trade lower with it (USD/CAD trade higher).  On a 240-minute chart, price is diverging from the RSI, which is typically a signal of a potential reversal.  Horizontal resistance and Fibonacci retracements come in between 1.3230 and 1.3260.  As mentioned on the daily chart, support is near 1.3100.

Source: Tradingview, City Index