USDCAD climbed to 1.3318 yesterday and seems determined to reach a new 2018 high. The most important reason for the decline in the Loonie is maybe the decline in the price of oil. Unlike crude’s sharp drop, however, USDCAD’s recovery did not develop so smoothly. For every step forward the bulls have been making one step back.
Fortunately, Elliott Wave analysts’ ability to identify the general direction of the market turned each pullback into another buying opportunity. The chart below was sent to subscribers over a month ago – on October 17th, 2018.
As visible, instead of joining the bears near 1.2950, the Wave principle suggested more strength can be expected. As long as 1.2783 was intact, the bulls were still in charge.
Resistance-Turned-Support Sent USDCAD Higher
In addition to oil’s weakness, there was another reason for our optimism, which was even more solid. The decline from 1.3386 to 1.2783 looked like a complete W-X-Y double zigzag correction. According to the theory, once a correction is over the larger trend resumes. Since USDCAD was in an uptrend prior to this corrective decline, it made sense to expect the bulls to stay strong.
Furthermore, the resistance line drawn through the highs of waves X and (b) of Y has been breached and was supposed to act as support now. The updated chart below shows that being correct in the analysis is not always enough. Traders have to be patient, as well.
The support line through waves X and (b) of Y did a good job putting the bears’ ambitions to rest. Over a month and almost 370 pips to the north later, USDCAD is now gravitating around 1.3300. Each of the several pullbacks along the way failed to make a new low, keeping the uptrend intact and Elliott Wave traders’ profits growing.
What will USDCAD bring next week? That is the subject of discussion in our next premium analysis due out late Sunday!