EURCAD surpassed the 1.61 mark on January 20th, but the bulls could not hold on to that momentum, which led to a sharp decline to 1.5245 just five days later. Currently, the pair stands slightly above 1.5415, but the recovery seems to be a timid one, not giving us enough confidence to “buy the dip”. If we apply the Elliott Wave Principle on the 30-minute chart of EUR/CAD, we get another warning not to go long here.
As visible, the sell-off has a pretty clear impulsive wave structure, indicating that the trend, at least in the short-term, is pointing down. This means the recovery, which is still in progress, is supposed to be nothing more than a three-wave correction. According to the theory, once this correction is over, the larger trend resumes. If this is the correct count, EURCAD might reach new intraday highs in the days ahead, but climbing above 1.61 is unlikely. As long as this level stays untouched, chances are we are going to see another slump towards 1.5200 or lower.