The Loonie is taking a bearish route for some days. With bearish momentum slowing down, price is likely to resume upside. The following looks at USDCAD with the possibilities of bullish resumption or bearish continuation based on 18 May USDCAD Elliott wave analysis.
18 May, AtoZForex – The USDCAD is going down as expected but the momentum is not strong enough. The bearish correction may run out of steam if the recent rally persists. There is also the possibility of more complex correction downside. It’s so clear that the bullish move will resume after a while, it’s a matter of time. In the last update, we expected the rally upside to be the last leg of a long term bullish correction. We used the chart below.
A significant breakout below the channel is very important as price may resume the long term bearish trend or at least make a 3-wave dip. As long as price is contained within the channel, the rally shouldn’t be considered over yet.
We preferred a strong bearish move . This would only be confirmed if price makes an impulse wave downside to resume a large bearish trend. A 3-wave correction was also mentioned. If there is a 3-wave correction, it does mean that the bulls are not done yet. This is how to use the short term trends to determine the long term direction by recognizing trendy and corrective wave patterns. There was a breakout afterward and that’s going to be our focus now. The chart below shows the sub-waves of this bearish move in 2 scenarios.
18 May USDCAD Elliott wave analysis: 1st scenario
The chart above a deeper correction than we have now. A double zigzag pattern which could could be held below 1.369. Price is not expected to break above 1.369 or this will be invalidated. If price is resisted at 1.369, we could have another bearish dip toward 1.345 before thinking bullish again. If price breaks above 1.369, the alternative scenario explained below have a better chance of playing out. If this plays out, sellers can hold on and buyers can wait more till 1.345.
18 May USDCAD Elliott wave analysis: 2nd scenario
If price breaks above 1.369, this means that the bearish correction has probably run out of steam. A break above 1.38 is very likely with further rallies toward 1.4. If this scenario plays out, sellers can look at exiting and buyers can consider a position.
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