USD/CAD Price Prediction: More downside expected as wave C extends

USD/CAD has pulled back within the midst of a strong downtrending move. On Wednesday the pair recouped about half the losses from the previous day and formed a Marubozu Japanese candlestick continuation pattern. These are long red candles that close near their lows. 

It is often the case that the market will retrace 50% of the Marubozu, which is what happened on Wednesday. Thursday sees a renewal of weakness so far. 

USD/CAD Daily Chart 

USD/CAD’s move down from the range high, which started on August 5, looks like an ABC pattern, otherwise known as a “Measured Move” (see labels on chart above). Such patterns are like large zig-zags. The wave C usually reaches a similar length to wave A, or at a minimum a Fibonacci 61.8% of A.

Assuming USD/CAD is in a wave C it will probably continue to unfold despite the present pullback. It should reach at least the conservative target for the pattern at 1.3326, the Fibonacci 61.8% extrapolation of wave A. In a very bearish case it could fall to the zone of the range lows (orange shaded rectangle on chart above). 

A break below the low of the Marubozu candle at around 1.3419 would provide bearish confirmation of more downside to the aforesaid targets.