USDCAD is about completing a bearish setup which could make a 500 pips or more downside. The expected dip is as a result of a bearish Elliott wave pattern and price making a reversal zone upside. The following explains the pattern completed as price may make a bearish move based on 4 May USD CAD Elliott wave analysis.
04 May, AtoZForex USDCAD is highly influenced by change in Oil prices. Crude Oil and USDCAD are inversely correlated. This means that USDCAD falls when Oil prices rally and rises when Oil prices fall. There is a likelihood that Oil prices will rally in the coming weeks as Oil producers implement Oil output cut agreement. It was reported that Russia has successfully reached a reduction of 300K B/D in April.
Technically USDCAD is about completing a corrective Zigzag pattern. The pattern is an extension of a year old correction. In the last update, we explained this pattern with the chart below.
Wave (C) as shown above is an impulse wave (another classic). The 5th sub-wave of this impulse wave pattern is terminating with an ending diagonal. It won’t be surprising if price crashes soon. The technical signs are there. Sellers should wait for price to break below 1.363. This setup will be invalid if price rallies above 1.3725 before breakout.
Price rallied further to 1.3725 to complete the pattern to complete wave (C) and a reversal could be imminent. The chart below shows the latest wave update.
4 May USD CAD Elliott wave analysis: what next?
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. More updates will come on this . Stay tuned to AtoZforex.
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