USDCAD is bouncing off an important support zone. How far will the resultant rally go? The following 10 July USDCAD Elliott wave analysis looks at the technical forecast of USDCAD based on Elliott wave theory.
USDCAD rallied back above 1.31 after ending last week below it. It had declined to the lower price of the 1.3122-1.3070 support zone. A bridge below the zone might have seen price going lower throughout the week. With price now advancing back to 1.3122, we might see an intraday bullish correction before the larger bearish correction continues. In the last update, we expected this to happen after price lowered from 1.3385 to complete a leading diagonal pattern which would most likely see price dropping to 1.25 in the coming weeks. The chart below was used in the last update.
The chart above shows USDCAD about completing wave i with a leading diagonal pattern at the 1.3070-1.3122 resistance turned support zone. Price could correct at any price within this zone. The most probable reversal price level is 1.3090-1.3100. If price holds above 1.3070, we might see a correction for wave ii up to 1.3203-1.3238 before the bearish move continues. A bridge below 1.3070 would mean that the expected pullback might not happen. If price rallies as expected and gets very high, the odds would favor the bulls again. Until a break above 1.3385 happens, the bearish move should continue. The wave structure of the rally is also very important. With employment data coming from the U.S and Canada tomorrow and the FOMC today, this currency pair will confirm the continuation of the long term bearish correction to 1.25 or the resumption of the long term bullish run above 1.3385.
Price, though dropped below 1.3090, was held above 1.3070 and then broke above 1.3122 as the chart below shows. What should we expect next?
10 July USDCAD Elliott wave analysis: what next?
The current rally is expected to be corrective. Price is much likely going to drop further as we complete an impulsive wave a (circled). The invalidity price level for this forecast still remains at 1.3385. Only a break above 1.3385 would render this forecast invalid. The current rally could reach 1.3188-1.3226 Fib-ratio zone before dropping further. A bridge below the 1.3070-1.3122 support zone will be required for the fast bearish move to 1.28-1.29 and then probably to 1.25. Stay tuned for the next update.
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