USD/CAD has been bouncing back and forth inside a 200-pip range on its short-term time frame. The pair has just tested support near the 1.1000 major psychological level and is en route to test resistance at the 1.1200 major psychological handle. Stochastic is in the overbought zone, hinting that a selloff might take place soon.

If you want to catch the rally for a quick scalp trade, make sure to set a tight stop below the recent consolidation near the 1.1075 area. If you’re bearish on this pair, wait for an actual test of the range resistance or for stochastic to indicate selling momentum before jumping in.

A short at the top of the range or at 1.1200 with a tight stop above the previous spikes to 1.1225 and a target of the 1.1000 could yield a high return on risk. Bear in mind that oil prices are on the climb once more and that this might support the Canadian dollar in the near term.

By Kate Curtis from Trader’s Way