What will USDCAD bring next week? That is the subject of discussion in our next premium analysis due out late Sunday!
USDCAD rose significantly this past week, climbing from 1.2512 at the open to as high as 1.2949 Friday. The surge can be attributed to the slide in crude oil prices. Oil and USDCAD are known to have an inverse correlation due to the heavy reliance of the Canada’s economy on the commodity.
And while the decline in crude oil made sense after its long rally to over $76 a barrel, the two don’t always move in sync. Fortunately, USDCAD has its own charts and patterns that forex traders can solely focus on. The chart below, for example, was sent to our subscribers on August 2nd. It revealed the bullish Elliott Wave setup that planted the seeds of last week’s surge.
The hourly chart of USDCAD focused on the structure of the recovery from 1.2007 to 1.2808. As visible, it looked like a five-wave impulse, labeled 1-2-3-4-5, followed by a simple a-b-c zigzag correction. Taken together, the two patterns formed a complete 5-3 Elliott Wave cycle.
According to the theory, the trend was supposed to resume in the direction of the impulsive sequence. Hence, with the pair under 1.2480, we thought more strength can be expected going forward. Twenty days later now, the updated chart below shows how the situation developed.
The rate started rising almost right away. With the exception of a small consolidation between 1.2480 and 1.2590, the bulls remained firmly in control the entire time. USDCAD exceeded the top of wave 5 on Thursday, August 19th, thus reaching the setup’s initial target and then some.
USDCAD and oil prices do, indeed, have an inverse relationship most of the time. This fact, however, doesn’t make predictions about them any easier. The good news is they produce their own Elliott Wave patterns to help us stay ahead of the market.
What will USDCAD bring next week? That is the subject of discussion in our next premium analysis due out late Sunday!
