Trading Crude Oil With Forex

On this USDCAD pair I am showing a double bottom pattern in its ugliest form. The reason I am outlining this pattern is to show that each pair has its own personality of trading. With this pair we are always expecting long spikes and ugly patterns so I normally trade this on a higher time frame to try and drop some of the noise off of the trading chart.  Crude oil often trades with some fast and aggressive spikes, these spikes are often outlined in the USDCAD pair since OIL has the highest correlation against the Canadian dollar than any currency pair.  It is important to remember that just because the price of oil may move this does not always mean the CAD will move with it. There are other factors that may come into play.

When to Trade Crude with Forex?

I can remember times when I would trade the Candian dollar based on crude while ignoring the unemployment news from Canada or other important news events, this can spell trouble for traders looking for a good correlation and I suggest only trading this correlation when news is not apparent from Canada. I always look for pattern and trade setups based not only on technical setups but also on fundamental setups.

Fundamental Questions I ask on Crude Oil

Is the previous rig count, or crude oil inventories supporting my swing trade? Is the US economy as well as world economies welcoming the oil price. For example is OPEC in the process of propping up oil? Or did they just make bearish comments that the price of oil at a low level is ok with them?

We have seen oil move based on comments from Russia, for example Putin announcing "Russia is able to sustain itself on oil at $30.00". These type of words will typically move oil lower, so we must be sure to take into all important news from different oil producing nations in order to grasp a good idea of the current fundamental picture.

Here is a good example of a USDCAD chart and I have also included crude oil, you will see similarities with the Forex chart as well as the crude chart in the inverse form.