Even though the USD/CAD is currently in retreat from its 2018 bull rally, longer-term price action hints at a potential major uptrend around the corner. Today’s post will analyze the larger structure of this currency pair.
Diagonal could point towards Uptrend
The USD/CAD may have completed a leading diagonal between Sep 2017 and Jun 2018 (see chart above). Price action prior to Sep 2017 already shows a distinct and complete long-term 3-wave bearish zigzag (not shown on chart), which gives the subsequent bullish leading diagonal scenario a higher probability than the alternative (i.e. triple zigzag).
A bearish correction, while Minor wave 2 is underway, was to be expected at the end of June and previous USD/CAD analysis posts mentioned this.
Price action since the June high is showing another smaller bearish leading diagonal within corrective Minute wave a, and price should now be ready drop further as minute wave c unfolds as an impulse within the zigzag pattern. A retest of lower Fibonacci levels can be expected while Minor wave 2 is culminating. This means that price should at least reach the 50% retracement level during the current bearish correction, which coincides with a strong horizontal r/s level at around 1.2740.
Once a complete bearish impulse is formed over the coming month, the way should be clear for a major bull rally as Minor wave 3 gets underway.
This provides a potentially highly lucrative trade opportunity (going long) in the medium-term if the right entry can be found at the end of the current correction.
More detailed updates with trade setups will be posted as and when these opportunities arise.
All the best along your trading journey