close icon

USDCAD Unreliable Resistance Identified in Advance

After slightly exceeding 1.3000 on October 8th, USDCAD retreated to 1.2926 two days later. Given that the pair has been declining since the 1.3386 top registered in late-June, assuming the bears are returning was quite justified. In addition, there was a declining trend line, which had previously led to significant selloffs on two separate occasions.
USDCAD breaches trend line resistance
According to conventional technical analysis, it made sense to expect more weakness after USDCAD bulls were initially rejected for the third time. Elliott Wave analysis, on the other hand, relies on a lot more than a simple trend line. It is a pattern recognition technique, which can help traders identify unreliable support and resistance levels in advance.

So instead of joining the bears between 1.3000 and 1.2900 last week, we decided to take a closer look at the structure on the rally from 1.2783 to 1.3010. The following 30-minute price chart of USDCAD was sent to subscribers as a short-term update on Wednesday morning, while the pair was still hovering around 1.2960.(some marks have been removed for this article)
USDCAD Bullish Elliott Wave Forecast
It turned out the structure of the recovery from 1.2783 was impulse. This means it consisted of five waves, labeled i-ii-iii-iv-v. Impulses indicate the direction in which the larger sequence is developing. On the other hand, every impulse is followed by a correction of three waves in the opposite direction, before the larger trend can resume.

USDCAD Elliott Wave cycle

Taken together, the five-wave rally to 1.3010 and the three-wave a-b-c decline to 1.2926 formed a textbook 5-3 wave cycle. To Elliott Wave analysts this pattern meant only one thing – USDCAD was going up.
USDCAD Elliott wave chart update October 14
In other words, the resistance line conventional technicians have been relying on was unlikely to hold. And it didn’t. Later the same day, USDCAD jumped over the fence and climbed to 1.3070 for a quick 110-pip gain.
USDCAD bulls break resistance line
It now faces another obstacle in the face of the resistance area near 1.3070 – 1.3080. Can the bears rely on it this time?

What will USDCAD bring next week? That is the subject of discussion in our next premium analysis due out later TODAY!



Stay informed with our newsletter

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

Privacy policy
You may also like:

GBPNZD: Pressure Mounts with Reversal in Place

GBPNZD has been in recovery mode for the past two years. The pair took off from 1.6705 in November 2016 and climbed to as high as 2.0470 in October 2018. The pound’s rally may seem counter-intuitive on the back of Brexit concerns in the United Kingdom, but that won’t be the first time the market…

Read More »

EURUSD Sharp U-Turn Predicted by Elliott Wave

2018 has so far been a terrible year for EURUSD bears and the month of October made no exception. The pair climbed to 1.1815 in late-September, but could not maintain the positive momentum. By October 31st it was down to 1.1302, losing over 300 pips that month alone. But in the Forex market traders cannot…

Read More »

Solving USDJPY Riddles with Elliott Wave Hints

Unlike the stock market, where a profitable company with a growing market share will eventually grow in value in the long-term, the Forex market can be a real riddle. Macroeconomic, political and country-specific factors are fighting for influence over currency rates in the $5-trillion-a-day market. USDJPY is one of the most closely followed pairs as…

Read More »

GBPJPY: Bearish Reversal Expected Near 151.00

GBPJPY has been in recovery mode since it touched 139.90 on August 15th. On September 21st, the pair climbed to a multi-month high of 149.72, but fell to an intraday low of 146.51 yesterday. As of this writing, the Pound is hovering around 147.90 against the Japanese yen. The time is appropriate to apply the…

Read More »

USDJPY Gave Us a Road Map Three Months Ago

There is a reason why it is called “trading” and not “bottom/top picking”. The latter is literally impossible even with the best trading tools and techniques. Even the Elliott Wave Principle, which we consider to be the best method for price behavior analysis, cannot tell us the exact price level at which the market is…

Read More »

GBPCAD ‘s Rally Needs a Healthy Pullback

October is shaping up to be a good month for GBPCAD bulls. The pair dipped below 1.6600 on October 2nd, but quickly reversed to the upside for a recovery of over 470 pips so far. Earlier today the Pound climbed to as high as 1.7070 against the Canadian dollar. However, extrapolating the current trend into…

Read More »

A Week of Trend Reversals in the Forex Market

The Forex market was very interesting to observe last week. Major news like the Non-Farm Payrolls report in the U.S., the new trade deal between the USA, Canada and Mexico, and Bank of Japan’s determination to keep fighting deflation all contributed to an eventful five days in the world’s largest market. News and events is…

Read More »

More analyses