USD/CAD Elliott Wave: Price meets resistance

Zorrays Junaid Alchemy Markets

Executive summary:

Medium-term top: A 2nd wave is nearing completion (or finished yesterday).
Bearish impulse developing: Once wave (ii) is complete, wave (iii) would be a strong decline.
Key level to watch: A break below 1.3669 will enhance the view of a top in place.

USD/CAD appears to be approaching a medium-term top. The recent resistance met may provide a ceiling for future price movement. If so, the next multi-hundred pip trend may be to the downside.

Current Elliott Wave analysis

USD/CAD has been in rally mode since February 11. The Elliott wave count is mature and a bearish reversal may be nearby.

The recent rally is viewed as wave ‘c’ of (ii) where (ii) was a zigzag. Typically, within a zigzag pattern, waves ‘a’ and ‘c’ tend to have a distance relationship where they are equal in length to each other or have a fibonacci relationship with one another.

In this example for USD/CAD, wave ‘c’ is the 100% Fibonacci extension to wave ‘a’, a common relationship. As a result, USD/CAD may need another brief rally to finish ‘c’ of (ii), but this market appears close to a bearish turn.

A break below 1.3669 will build additional evidence that wave (ii) topped and that wave (iii) is in its beginning stages.

After wave (iii) begins, then we anticipate new lows below 1.3460 and 1.31 with even lower levels possible.

Bottom line

USD/CAD appears to have reached a medium-term top for (ii). This implies a wave (iii) decline that likely reaches 1.3460 with even lower levels possible.

Author

Zorrays Junaid

Alchemy Markets

Zorrays Junaid has extensive combined experience in the financial markets as a portfolio manager and trading coach. More recently, he is an Analyst with Alchemy Markets, and has contributed to DailyFX and Elliott Wave Forecast in the past.

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