- Daily: The USD/CAD has been continuing sideways action, mainly between 1.08 and 1.0. In the last couple of months, the market started to develop a triangle congestion pattern. This shows the market at equilibrium in the middle of the range near 1.05/1.04.
- An Elliott Wave Guide is that these congestion patterns usually last 5 or 7 swings. Now assuming the rally into 1.08 in May was the first, a, we may have completed the 5th, e wave.
- If there is an extension, the triangle may continue further towards the apex, but we already see 2/3rds of the triangle complete so a break out is imminent. I put more probability in a break out soon, whether it is real or a fake out.
- Some fundamentals from yesterday's session might help you with your outlook: BOC Raises Rates...by Nick Nasad, BOC Rate Hike Supports Canadian Dollar by Hans Nilsson
- With fundamentals slightly tilting towards the loonie, we may see a break below and a test of parity again.
- In the short-term, a swing projection targets 1.02. 1.02 is a support area as well, as you can see in the weekly chart below.
- You will also see a negative reversal, albeit a weak one. A negative reversal is when the RSI makes a new high, but price does not.
Fan Yang Currency Analyst Commodity Trading Advisor
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