The trading setup below would be indicative of a trader who is bearish on the price of USOil. By expecting prices to decline on USOil, it would be predicted that the USDCAD would break higher in line with our mentioned inverse correlation. Traders can use the 1.0100 resistance level and plan for a breakout to higher highs in an established uptrend. Entry orders can be set below this point while a stop loss can be placed under current resistance.
Remember there are always two sides to every trade. Traders expecting USOil to increase in value would expect the exact opposite. If resistance holds and price remains beneath 1.0100 traders may reasonably expect the USDCAD to turn lower.
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