USD/CAD Price Prediction: Countertrend rally might be stalling

USD/CAD has pulled back after bottoming on September 25.
The correction that ensued now seems to have run its course and the pair could be vulnerable to recapitulation.

Joaquin Monfort FXStreet

USD/CAD suddenly reversed course in the midst of a strong downtrend and recovered on September 25. The pair quickly rose up from 1.3420 to 1.3539 but now the rebound appears to have stalled after peaking at a similar level for the past two consecutive days (blue box on chart below).

USD/CAD Daily Chart

There is a chance that the pullback has run its course and given the medium-term trend remains bearish prices might now start falling again.

A move below 1.3457 (September 26 low) would confirm a resumption of the downtrend, probably to at least the 1.3420 low of September 25. A close below that would provide bearish confirmation of more downside to the range lows – a zone beginning at around 1.3222 and ending at 1.3106.

USD/CAD seems to have formed a large zig-zag pattern known as a Measured Move since peaking on August 5. If so, then it augurs bearish for the pair as the downside target for the last wave C of the pattern is at a minimum 1.3326, the 61.8% Fibonacci extension of wave A.

Author

Joaquin Monfort

FXStreet

Joaquin Monfort is a financial writer and analyst with over 10 years experience writing about financial markets and alt data. He holds a degree in Anthropology from London University and a Diploma in Technical analysis.

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