The "base" that the USD/CAD is building since we break the downtrend line a couple weeks back is an inverted head and shoulders pattern. The neckline is at the 1.3260 level. What also should be noted, the crude oil market has rallied over 9% this week which has had not downside impact (strong CAD) on the pair. This is interesting as crude oil may find resistance near the $40.50 level which could allow for some CAD weakness. Bottom line, lack of downside momentum in the pair may ignite some short covering above the 1.3260 level and especially if we break the June 10th lows of 1.3315. 

 

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