close icon

USDCAD Approaching 1.3800 Target

USDCAD climbed to 1.3757 this Tuesday after the recovery from 1.3222 continued. The pair has been making higher highs and higher lows since mid-April after the bears could not even drag the rate below 1.3200. Instead, it seems to be approaching the 1.3800 – level not seen since February, 2016. Explanations for the surge vary wildly, but the most widely accepted one is that the Looney is declining against the U.S. dollar, because of the looming housing crisis in Canada following the collapse of Home Capital Group Inc.

It makes sense from a news-following standpoint, but what we are interested in is whether the Elliott Wave Principle could have helped traders predict the rally earlier. The following chart of USDCAD was sent to clients ten days ago, before the market opened on April 24th.(some marks have been removed for this article)
elliott-wave-chart-usdcad 1h april 24th
The pair closed at 1.3505 on Friday, April 21st, but the point is that there was a complete five-wave impulse from the 1.3222 low. According to the theory, impulsive rallies are followed by three-wave declines. In addition, there was a bearish divergence between the highs of waves 5 and 3, suggesting “a decline of over 100 pips is highly probable.” Then, “as long as 1.3222 holds, targets above 1.3800 would be there for the taking.” Here is how the situation worked out. 
elliott-wave-chart-usdcad may 4
Eventually, the pair fell by just 95 to 1.3410, where it found support and took off again. The integrity of our invalidation level for this count at 1.3222 was never questioned by the market. The exact path to the north was hard to predict, but it is all well when it ends well.



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

You may also like:

Trade War Fears Shrugged Off by USDJPY

Less than a month ago, USDJPY was trading below 105.00 after plunging to 104.64. The media hurried to explain the dollar’s weakness against the Japanese yen with the looming trade war between the United States and China. Today, a trade war between the two largest economies is a near certainty, after China threatened to fight…

Read More »

USDCAD Selloff: Non-Farm Payrolls Just an Excuse

The last time we wrote about USDCAD, it was hovering around 1.29, after a decline from 1.3125. In a video, published on March 28th, we demonstrated how Elliott Wave traders got ahead of the bearish reversal that occurred a week earlier. Two weeks later now, the bulls are yet to find a way to fight…

Read More »

EURCHF Vulnerable to Bearish Attacks

EURCHF fell to 1.1447 on February 8th, but has been steadily recovering ever since. By March 28th, the pair was already testing the resistance near 1.1800, but could not breach it from the first try and fell to 1.1732 earlier today. Should we expect the next attempt soon, or maybe the bulls would need more…

Read More »

USDCAD Bears Land a Heavy, but Predictable Punch

1.2900 has been a tough nut to crack for USDCAD bulls. First, they failed to breach it in late-October 2017. Then they tried again a month later, but the attempt was once again unsuccessful. The third try was in mid-December 2017, but after a swift touch of 1.2921, the pair plunged to as low as…

Read More »

Trade War Not to Blame for USDJPY’s Plunge

USDJPY bulls looked like they were up to something, when the pair climbed to 106.61 on Tuesday. Three days later today, the pair is currently hovering at 104.90 after a 200-pip plunge to 104.64. Conventional wisdom suggests traders should look no further than the looming US-China trade war to explain the Japanese yen’s strength against…

Read More »

USDHUF Close to Major Elliott Wave Support

Surprisingly or not, the U.S. dollar has been losing ground not only to its major rivals like the Euro and the Japanese yen, but against the Hungarian Forint, as well. USDHUF reached 302.22 on December 15th, 2016. A year later, it was hovering near 260.00 and before the end of January 2018, the pair fell…

Read More »

Canadian Dollar Weakness Anticipated by Elliott Wave

Canadian dollar bulls had another week to forget, after the USDCAD rate surged from a low of 1.2615 on Monday to nearly 1.2900 so far. There have been two fundamental factors that applied pressure on the Loonie – the decline in crude oil prices and Donald Trump’s intention to impose import tariffs of 10% on…

Read More »

More analyses