USD/CAD turns bearish as five waves unfold from the highs

USDCAD turned lower this month and has now broken below not only one but two important 4H trendline supports. The first break came below the lower trendline of the bullish channel, while the second one was a potential break below the base channel support. This shift in structure puts the pair in a more bearish position and opens the door for a higher-degree three-wave decline.

Looking at the latest price action, the new weekly low has completed a five-wave move lower, which is typically a bearish pattern and suggests that sellers remain in control. However, some support could appear around the 1.3967–1.4000 area, where we may see a corrective recovery before the downtrend resumes.

Ideally, we would like to see a bounce back toward the 1.4120–1.4160 resistance zone, where the pair could complete a corrective ABC recovery before another leg lower unfolds. As long as the structure remains bearish, rallies are likely to be viewed as corrective rather than the start of a new bullish trend.