Ahead of the USDCAD Reversal and 500-Pip Rally

What will USDCAD bring next week? That is the subject of discussion in our next EW PRO analysis due out late Sunday!

Despite the well-known inverse relationship between USDCAD and the price of oil, the two have moved up in tandem on numerous occasions in recent weeks. And while the surges in crude can be attributed to the persisting global tensions following Russia’s invasion of Ukraine, explaining USDCAD ‘s swings is not that easy.

So instead of searching for logical explanations that won’t do us any good anyway, we focus on the Elliott Wave patterns the pair has been drawing. For instance, we’ve been tracking a bullish 5-3 wave cycle for over a month now. The chart below, included in our March 21st EW PRO analysis, helped us stay ahead of both the bullish reversal near 1.2400 and the following 500-pip surge to over 1.2900 so far.

Ahead of the bullish reversal from 1.24 in USDCAD

A month and a half ago, USDCAD ‘s 4h hour chart revealed that the recovery from 1.2288 to 1.2964 had an impulsive structure. This meant that the uptrend was supposed to resume once the following correction was over. The correction, by the way, looked like an a)-b)-c) flat correction. Wave a) was a simple a-b-c zigzag and so was wave b). It is interesting to notice that wave ‘b’ of b) was a rare expanding triangle pattern.

Similar Elliott Wave setups occur in the stock, crypto and commodity markets, as well. Our Elliott Wave Video Course can teach you how to uncover them yourself!

If this count was correct, wave c) was likely to evolve into a five-wave impulse, labeled i-ii-iii-iv-v. A drop below the end of wave a) was likely to occur before wave c) was over. On the other hand, in order for the positive outlook to survive, a bullish reversal had to form above 1.2288. From the distance of the first week of May now, we can see that is exactly what happened.

USDCAD add 500 pips in Elliott Wave manner

Wave c) did evolve into an impulse and did breach the bottom of wave a), but the bears couldn’t drag the pair below 1.2403. Following the bullish reversal on April 5th, USDCAD climbed to 1.2914, adding over 500 pips in less than a month. Our invalidation level at 1.2288 was never put to a test.

We have no idea how is the Fed going to deal with the surging inflation. We have no clue to what extent the latest lockdowns in China are going to disrupt global supply chains. Nor do we know how the war in Ukraine is going to develop. All we know is that Elliott Wave analysis is a powerful ally in any market. We plan to keep relying on it to guide us in these uncertain times.

What will USDCAD bring next week? That is the subject of discussion in our next EW PRO analysis due out late Sunday!

New to Elliott Wave?

Elliott Wave principle offers a completely new understanding of what the nature of the markets is, what drives them and what can be derived from their movement. This course is for those of you, who have been looking for an honest Elliott Wave guide, describing the method’s advantages over other trading tools, but not hiding its weaknesses.

Check Video Course    or     Check our eBook


See our Video Course
or check our eBook

Last year over 60k readers trusted EWM Interactive to help them in their trading decisions.

I’m very happy i discovered your service. Thanks so much and keep up the good work!

- Xavier N.

Just loving your analysis. Thank you so much, really wished you add some more currencies to your list You have a client for life :)

- J. Kotzee

I love the way EWM does business: response times & overall friendly demeanor are fantastic... and the prices are very fair. The trade recommendations read like like they come from a seasoned trader that is used to winning. Couldn't ask for more.

- C. Montgomery

I love the way EWM does business: response times & overall friendly demeanor are fantastic... and the prices are very fair. The trade recommendations read like like they come from a seasoned trader that is used to winning. Couldn't ask for more.

- C. Montgomery

I’m very happy i discovered your service. Thanks so much and keep up the good work!

- C. Montgomery

Just loving your analysis. Thank you so much, really wished you add some more currencies to your list You have a client for life :)

- C. Montgomery