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.

Privacy policy
You may also like:

AUDNZD Bears Bumping into Fibonacci Support

Earlier this month we published an article about AUDNZD, sharing two slightly different, but both bullish counts, which are supposed to eventually lift the pair to 1.1500 or higher. It is too early to say how this is going, but at least the short-term outlook seems to support the bigger picture. AUDNZD has been declining…

Read More »

USDCAD Walks the Path to Month-Old Target

USDCAD bulls proved how stubborn they could be by lifting the pair to a one-year high, despite the numerous bearish interventions along the way. During the last month, USDCAD has been slowly progressing in a choppy and overlapping manner as U.S. – Canada relations took a turn for the worse following the G7 summit. The…

Read More »

AUDNZD Bulls Have a Decision to Make

It has been almost two years since we examined the weekly chart of AUDNZD and concluded that the pair was likely to “Throw a Surprise Bulls Party”. And indeed, the Australian dollar managed to climb to 1.1290 against the New Zealand counterpart by October 2017. Unfortunately, that was the best the bulls were capable of…

Read More »

Crude Oil and USDJPY Ruled by One Pattern

Everything was going so well for USDJPY and crude oil bulls until last week, when both the exchange rate and the WTI crude price made sharp bearish reversals. Oil fell from as high as $72.88 to $67.40 a barrel, while USDJPY plunged from 111.40 to 108.95. Normally, the media tried to explain the selloffs with…

Read More »

USDMXN Precisely Followed Its Elliott Wave Path

It has been almost four months since we last wrote about USDMXN. On January 30th, the pair was hovering around 18.70, following a sharp selloff from 19.90 to 18.30. The good news was that instead of wondering what the Dollar-Mexican Peso exchange rate was going to do next, we managed to recognize a very reliable Elliott…

Read More »

GBPAUD On a Slippery Slope Towards 1.53

If you take a look at how GBPAUD has been doing between October 2016 and March 2018 you might think Brexit never happened. The British pound rallied from as low as 1.5322 to 1.8509 against the Australian dollar, gaining almost 21% in those 18 months. As of this writing, the pair is hovering around 1.7720,…

Read More »

USDZAR Facing Elliott Wave Resistance Near 13.00

USDZAR, the ticker symbol of the U.S. Dollar – South African Rand Forex pair, is not among the ones we regularly cover. However, we are constantly looking for article material, so when a client asked us if we could take a look at it, we told him – no problem. The only thing we needed…

Read More »

More analyses