Forex Technical Update
- The USD/CAD was rejected from rallying above 1.0, parity level.
- A glance at the RSI sees that the 1H reading is still above 40. Since it has tagged above 70, remaining above 40 would be a sign of bullish momentum maintenance.
- It should also be noted that the attempt was in a 5-wave motive wave manner, and the decline since has been in an 3-wave corrective wave manner.
- According to Elliott Wave Principles, this completes a wave cycle, and another rally could be coming.
- That is, if the correction is actually over. It CAN be due to its completed abc structure, but sometimes, consolidations extend.
- Support above 0.9911 keeps the scenario that we have completed a correction, awaiting bullish structure to develop.
- Otherwise, see if 0.99 (61.8% retracement) can stay as support.
- If 0.99 breaks, the bullish scenario is on hold, but support at 0.9870 can still hold the bullish outlook in the medium term, as long as it can rally back above the 0.99 pivot.
- If 0.99 breaks AND the market starts to find it as resistance, our bullish scenario is invalid.
- Also, if the RSI in the 1H chart falls back below 40, the bullish continuation scenario is on hold, and if it breaks below 30, the market is likely back to the range-bound trading mode it has been in in August.
- At the moment, USD/CAD bulls are kept at bay, and only a push above 0.9976-0.9980 will become the first signal for a bullish continuation.
- Above parity, we have 1.03 as a conservative breakout target.
Fan Yang CMT
Chief Technical Strategist