Oil, Natural Gas, USD/CAD Technical Analysis: Navigating Key Resistance and Support Levels

The USD/CAD declined from resistance levels amid thin trading volumes ahead of the New Year holiday. The pair weakens due to the Canadian Dollar’s strength, supported by rising oil prices. Meanwhile, the US Dollar Index remains strong, buoyed by the Federal Reserve’s hawkish outlook. Recent Fed comments and projections suggest a cautious approach to rate cuts in the coming years, which could support the US Dollar.

WTI crude oil (CL) prices increased for the second consecutive day, trading around $71.20 per barrel, while Brent oil (BCO) trades around $74. However, concerns about oversupply in 2025 and uncertainty regarding Chinese demand may limit further oil price gains, potentially capping the Canadian Dollar’s momentum.

Despite the Canadian Dollar’s current strength, USD/CAD could find support as the Fed’s hawkish stance bolsters demand for the US Dollar. The US Dollar Index trades near 108, building positive momentum and maintaining an upward trend. Market expectations for inflationary fiscal policies under the new administration, including tax cuts and deregulation, could further strengthen US Dollar sentiment. However, the interplay between oil price trends and evolving economic conditions in 2025 will remain critical in determining the USD/CAD’s direction in the coming months. The market awaits the unemployment data on Thursday and the ISM manufacturing data on Friday for further direction on the US Dollar.

WTI Crude Oil (CL) Technical Analysis

Oil Daily Chart – Positive Momentum at Apex of Triangle

The daily chart for crude oil shows that prices are forming a bottom and showing positive price action toward the resistance at $72.50. However, the price remains within the apex of a triangle, indicating a neutral trend. A break above $72.50 would suggest further upside potential in the oil market. The RSI is turning upward from the mid-level, supporting the possibility of further gains. A break above the 200-day SMA at $75.50 would confirm the next move higher.

Oil 4-Hour Chart – Positive Price Development

The 4-hour chart for WTI crude oil shows that prices are consolidating after breaking out of a triangle pattern and hitting resistance around the $71.40 area. A break above $71.40 could push prices toward $72.50. Similarly, a break above $72.50 would signal further upside potential in the oil market, while a break below $66.70 would continue the downward pressure on prices.

Natural Gas (NG) Technical Analysis

Natural Gas Daily Chart – Upward Trend

The daily natural gas (NG) chart shows that the price has formed a cup and handle pattern. A break above $3, a positive development and a breakout above $3.60 indicate bullish price action. This suggests the continuation of the upward trend in natural gas prices. Strong seasonal demand for heating in January may keep natural gas prices elevated in the coming weeks. The 50-day SMA and 200-day SMA confirm the upward trend and support the likelihood of higher prices for natural gas.

Natural Gas 4-Hour Chart –Ascending Channel

The 4-hour chart for natural gas shows that the price is trading within an ascending channel. A breakout above $3.60 has pushed prices above the ascending channel’s resistance. The formation of a cup and handle pattern within the ascending channel, followed by the breakout above $3.60, suggests that natural gas prices may continue to increase. The $3.50 to $3.60 range remains a key support zone for natural gas.

USD/CAD Technical Analysis

USD/CAD Daily – Price Correction

The daily chart for USD/CAD shows that the pair has broken out of an ascending channel and continues to exhibit strength due to US dollar momentum. However, the pair has encountered resistance at the $1.4460 level and has begun consolidating. This consolidation suggests the pair may seek support near the ascending channel’s breakout level. The overall direction remains upward as long as the pair remains above $1.4250. The correction from $1.4460 aligns with the overbought conditions indicated by the RSI.

USD/CAD 4-Hour Chart – Descending Broadening Wedge

The 4-hour chart for USD/CAD shows that the pair is trading within an ascending channel and has hit resistance around $1.4460. After reaching this resistance, the pair consolidates and forms a descending broadening wedge pattern within the ascending channel. A break above $1.4460 would signal a continuation of the upward momentum, while the next support lies at $1.4280. The RSI has fallen below the mid-level, indicating the potential for further downside in the pair.