It is not the job of a currency pair to rise 17% in a matter of months. That’s what stocks and crypto are for. Yet, EURCAD surged from 1.2876 in August, 2022, to over 1.5110 last month, showing that even Forex traders can sometimes “buy and hold“. Only sometimes, though, because this strategy only works until it doesn’t.
With the pair currently hovering near 1.5060, traders are wondering if its rally can continue. We’re wondering the same thing. However, correctly deciphering the plethora of macro factors that influence the foreign exchange market is next to impossible. That’s why we rely on Elliott Wave analysis instead, whose patterns are known for their ability to absorb the related news and events.
Similar Elliott Wave setups occur in the crypto, commodity and stock markets, as well. Our Elliott Wave Video Course can teach you how to uncover them yourself!
The 4h chart of EURCAD reveals that the surge from 1.2876 to over 1.5110 is a five-wave impulse. We’ve labeled the pattern 1-2-3-4-5. The five sub-waves of wave 3 are also visible and marked i-ii-iii-iv-v. The pair has taken the guideline of alternation into account, as well. Waves 2 and ii have taken the shape of sideways flat corrections, while waves iv and 4 are both sharp drops.
If this count is correct, wave 5 is about to complete the entire wave (1/a) very soon. It looks like a textbook ending diagonal pattern, whose wave ‘v’ needs to make one last swing high near 1.5200. According to the theory, a three-wave correction follows every impulse. Here, we can expect a drop towards the support of wave 4 near 1.4200 in wave (2/b). It looks like EURCAD bulls are going to take a longer rest before showing up again.
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