USDCAD has been rather boring recently. The pair has been moving sideways for several months now, locked between 1.3250 and 1.2660 since May. Such behavior could easily annoy traders, who are waiting for a clear trend to join. Boring or annoying, however, does not mean that USDCAD has been unpredictable. The following chart first emerged as an alternative count in our USDCAD premium forecasts on August 22nd.(some of the marks have been removed for this article)
The Elliott Wave Principle allows analysts to recognize more than one single possible scenario and act according as the situation develops. As visible, we assumed that USDCAD’s consolidation might evolve into a triangle correction in the position of wave X. So, we were expecting waves (d) up and (e) down, followed by more strength, once the entire pattern was complete. The point was that, in order for the triangle to remain valid, wave (d) should stay below the top of wave (b) at 1.3251, while wave (e) was not allowed to decline below the bottom of wave (c) at 1.2767. These two figures became our road map in USDCAD. As weeks passed, this count became our primary one. The updated 4-hour chart of USDCAD, given below, shows that thinking like an Elliott Wave analyst pays off.
Wave (d) rose to 1.3147. Then wave (e) fell to as low as 1.2822. Both waves maintained the triangle’s requirements and contracting shape. Once wave (e) bottomed out, USDCAD started rising as expected and is currently hovering around 1.3160. This article aims to prove that even when the market is directionless, Elliott wave analysis could still help traders get an idea of its intentions and stay prepared, while relying on a “road map” of concrete price levels to guide them. What more could you ask for?
What to expect from now on? What is the bigger picture saying? Is USDCAD going to continue even higher or the resistance near 1.3200 would turn out to be too strong for the bulls to breach? Prepare yourself for whatever is coming. Order your Elliott Wave analysis due out every Monday at our Premium Forecasts section. Stay ahead of the news in any market with the Elliott Wave principle.