Forex Technical Update
The USD/CAD has been consolidating in an expanding pattern that twisted and turned but had corrective structure throughout. The 4H chart shows that the latest bear swing however is in a impulse wave: 1-2-3-4-5. As the market accelerates below the projected declining support and the 4H RSI reading dips below 30, a bearish continuation is signaled.
With the RSI below 30 and a 5-wave swing completing, we might expect some pullback. Now this 5-wave dip could be the 1st wave of a developing impulse wave going down. When we look at the daily chart, we see that we are in a wave (v) of a wave 3 of either a (C) or (III) wave. this wave (v) which ends 3 can be projected to 0.97 with a fibonacci expansion of wave (i).
Then a pullback, wave 4 should not break above 1.0045, wave 1, after which a wave 5 to complete (C) or (III) can be anticipated.
This scenario means a short-term anticipation of bearish continuation toward 0.97, 0.9650, after which a major pullback (like Dec 2011′s) can be expected but not to push beyond 1.0045. Then another wave down can be expected to target the 0.94-0.9450 lows from 2011. A break above 1.0050 suggests reassessment of the wave count, and suggests that the bear run was corrective and could be over.
Fan Yang CMT is a trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes and IBTrade will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.