USDCAD is expected to continue downside after the completion of a long term correction upside. The following 17 May USDCAD Elliott wave analysis looks at USDCAD forecast based on Elliott wave theory.
According to technical trend analysis, trends are followed by major and minor corrections. At the end of these corrections, the trend resumes until the trend is broken and price reverses completely. Elliott wave theory gives a more distinct and defined look at this idea. USDCAD is expected to drop back to 1.2 if this idea will play out this time around. I will illustrate this idea and forecast with two analytical charts.
The chart below shows a big corrective pattern completed and how price reacted to it.
17 May USDCAD Elliott wave analysis: Higher degree
At 1.2061, on 8th September 2017, USDCAD completed an impulse wave. From that time till 19th March at 1.31242, a 3-wave correction completed. The impulse wave (Impulse wave) and the correction (Zigzag) that followed were both defined. Price charts move in patterns that can be recognized on any time frame. There are no perfections including Elliott wave theory but it does give a general overview of the market more than many methods out there. At the end of this correction at 1.3124, price dropped very fast to complete another impulse wave downside. This will therefore make us speculate another impulse wave downside as a corrective wave 2 followed wave 1 drop. The sequence of move here can be liken to what general trend analysis explains. The chart below uses the lower time frame to analyze price reaction to the end of wave 2
17 May USDCAD Elliott wave analysis: Lower degree
At the end of wave 2 at 1.3, another impulse wave followed and then another 3-wave correction. The bullish corrective rally to 1.2927 marked the end of the 3rd generation of these fractals. Smaller patterns are making up similar bigger ones. Now, look at the chart above again. Are we about to see another 3-wave rally for yet another big move downside? Of course, this is highly likely. Only a break above 1.3 would break this sequence but if the correction stays below 1.2927 and its corrective, a new price drop below 1.265 is there to take. Stay tuned for the next update.
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