USD CAD rate back to 1.08

ANALYSIS | 08/26/2014 13:05:36 GMT

If you have been studying the Elliott Wave Principle, you probably know that once you have a complete five-wave sequence, you should expect a correction in the opposite direction. Now let’s see if the 4-hour chart of USD CAD can shows what we are looking for.

And the chart depicts a perfect impulsive wave, which means that the general direction of USD CAD exchange rate for the month ahead should be down. In order to determine, if the trend has already reversed, we should be able to count the five sub-waves in the structure of wave (5). The 30-minute chart could do the job.

It turns out, that wave (5) has the necessary five waves, which brings us to the conclusion that the whole pattern on the 4-hour chart is completed. Furthermore, wave 4 of (5) is a triangle and every triangle precedes the final movement of the sequence. In this case – wave 5 of (5). Having said that, USD CAD has probably reversed to the south already. The proper minimum retracement levels for the expected correction lie around 1.0850, but a further decline to 1.08 should not be excluded.

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