USDCAD dropped yesterday after being rejected at an important resistance zone. What should we expect today? The following 19 July USDCAD Elliott wave analysis gives technical insights.
In the last update yesterday, we discussed the possibility of price dropping after completing an important corrective wave pattern at a Fibonacci confluence zone. The double zigzag pattern which started from 1.3060 was well contained within a channel with a Fibonacci confluence level just at the top of the channel. It suggested an imminent bearish move. Price did as expected. The chart below was used in the last update.
The rally happened as expected. Price is expected to complete a double zigzag reversal pattern before it resumes the 1.3385-1.3060 bearish trend. There is an interesting Fibonacci confluence level just few pips above the double zigzag channel roof. 61.8% Fib-retracement of 1.3385-1.3060 drop and the 100% Fib-projection of wave w from x (circled). If there is a reversal signal at this level, we should see a fast drop back to 1.3060 and below. If price rallies swiftly above 1.3260-65, the bullish move would continue to 1.3357.
19 July USDCAD Elliott wave analysis: what next?
Price was rejected at 1.3260-65 and dropped. There has been a rally following but that might not last long before the bears resume again. If the correction of the 1.3385 to 1.3060 decline has completed as shown above, we should see price breaking below the channel, down to 1.3060 and eventually 1.3. The long term bearish target still stays at 1.25. Unless a sudden break above the new top at 1.3260, this forecast should hold. Stay tuned for the next update.
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