USDCAD has formed lower highs and higher lows to cruise inside a descending channel on the 1-hour chart. Price is testing support and could be due for a bounce back to the channel top again.

Applying the Fibonacci retracement tool shows where more sellers could be waiting. The 38.2% level is near the mid-channel area of interest at 1.3030 then the 50% level lines up with the 1.3050 minor psychological resistance. The 61.8% Fib coincides with the channel resistance at 1.3064 and the 200 SMA dynamic inflection point.

On the subject of moving averages, 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 100 SMA is also close to the 50% Fibonacci retracement level, possibly adding to its strength as resistance.

However, stochastic is turning higher to signal a return in bullish pressure for now. The oscillator has plenty of room to climb before reflecting overbought conditions or exhaustion among buyers, so the correction could last longer. RSI appears to be treading sideways to signal consolidation, barely offering directional clues at the moment.

The Loonie is enjoying strong support from the pickup in risk appetite and the rally in crude oil prices. Earlier on, the Department of Energy reported a surprise draw in stockpiles of 0.8 million barrels instead of the estimated build of 0.1 million barrels.

Hopes for a vaccine to be distributed soon is also keeping traders hungry for more risk in anticipation of business conditions returning to normal. This could lift demand for fuel and energy while also drawing traders away from safe-haven assets like the US dollar.

Volatility could pick up over the next few hours as traders book profits ahead of a shortened trading week for the Thanksgiving holidays.