USDCAD declined as expected. Another drop-off is probable before the recovery starts. Traders may find this article helpful.
USDCAD was close to 1.10, when we published an article, saying that the US dollar could go back down to 1.08 against the Canadian dollar. As always, our forecast was based on the Elliott Wave Principle, which, in our opinion, is the best method, when you want to get an idea of where prices are most likely to be headed. This is exactly what every trader wants, since he/she makes money by correctly predicting future price movements. In fact, investors’ long term decisions are based on expectations as well, which is why they can benefit from the Wave Principle. Now let’s go back to the USD CAD exchange rate. The chart bellow shows you how the pair looked like on 26th August, when we made the forecast.
According to the Theory, after every five-wave impulse, a three-wave correction in the opposite direction should be expected. And that is what we did. Having a complete impulsive sequence to the upside, chances were good that a decline would start soon. The next chart gives you the current outlook on the US dollar against the Canadian.
As you can see, rates plunged sharply and reached 1.0808 on 29th August, only three days after the prediction, which is more than enough to consider this a successful prediction. However, it seems that USD CAD may go to a new low. 1.0760 looks like a good support level for wave C of (2/B), since it marks the 61.8% Fibonacci level, where second waves often end. That is why we would expect a reversal to the upside in this area. This count would be invalidated, if prices fall below the start of the impulsive rally – 1.0617.
