USDCAD is about hitting a support price level. Will price rally from there? The following 5-6 June USDCAD Elliott wave analysis looks at USDCAD technical forecast based on Elliott wave theory.
USDCAD is still on its way down after completing a diagonal pattern at 1.3385 last week. We identified a double top reversal pattern at the 1.3380-1.3385 price zone and expected it to drop from there. From the 1.3385 top, price has dropped more than 250 Pips. The diagonal pattern was meant to be a leading one, so the drop could be limited at 1.25. This means that, from our technical perspective using Elliott wave theory, price still has a big change of dropping further and the current price activities and wave formations have not proved otherwise yet. However, price is getting to an important price support zone. This zone was once a resistance zone which was broken late last month in the last leg of the rally to 1.3385. Not only is price getting to this zone but also about completing a reversal pattern. Will price return upside or just make a bullish correction? Before we check, let’s revisit the last update where we used the chart below.
The fast impulse wave drop from 1.3385 to 1.3130 is the first indication that USDCAD might continue downside in the coming days. As the chart above shows, price has started a slow correction upside which could reach 1.32223-1.3258 Fib-ratio retracement levels – Will the correction go higher? It’s likely but until a break above 1.3385, the odds still favor more price drops to 1.25.
Price rallied to 1.3225 as expected before it dropped back below 1.3130. With the new price activities, we have a whole different wave pattern from 1.3385. This new wave pattern suggests wave i might not have ended at 1.3130 with an impulse wave. The chart below shows the new update.
5-6 July USDCAD Elliott wave analysis: what next?
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. Stay tuned for the next update.
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