An Interesting Development On The USD/CAD Charts – All Paths Lead Down

Regardless of the strong correlation between USD/CAD and WTI Crude Oil the former still moves following its own rules and forms figures that we can try to analyze.

This is what I see on the chart today:

It is noticeable that on the monthly time frame the pair is moving along the middle line of the Bollinger Bands indicator, which draws it close like a magnet and while doing so USD/CAD is forming a barbed wire pattern.

This pattern is very large and sooner or later there will be a huge outburst in either direction.
On the weekly time frame the pair is forming a trend channel once again (in blue) and I think it will probably reach the support trend line at around 1.3420 – 1.3400.

If USD/CAD breaks out below the support trend line of this new channel, the possibility for the pair to continue dropping is increasing, with the limit of the blue channel being 394 pips to the downside from the breakout level.