CADJPY has formed higher lows and higher highs inside a rising channel on its 4-hour time frame and is currently testing the mid-channel area of interest. A break above this could put it on track towards testing the resistance at 79.00.

However, the 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside or that the selloff is more likely to gain traction than to reverse. The gap between the indicators is narrowing, though, so slower bearish momentum could be in play.

Still, the 200 SMA lines up with the top of the channel to add to its strength as a ceiling. If it holds, another dip to the channel support at 75.00 might follow.

Volume has been edging lower in the past weeks to indicate market caution as traders might be holding out for the outcome of the OPEC meetings before putting larger positions on the commodity.

Stochastic is indicating overbought conditions or exhaustion among buyers, and turning lower could confirm that sellers are taking over. ADX is below 25, though, so range-bound market action could also be possible.

The oil-related Loonie drew support late last week when the US signaled that talks with Russia could pave the way for an output deal among global producers. Recall that the commodity took a large hit when the cartel was unable to get Russia to participate in its agreement to cut output in order to support prices.

The commodity is still under downside pressure owing to weaker demand and risk-off flows. Worsening coronavirus cases are keeping trade and travel restrictions in place while also weighing on business activity. Stimulus from governments and central banks appear to be stemming the declines for the time being.