? USD/CAD Expanding the Correction of Wave 4 ?

3 min read
Adarwish

adarwish

Author

Hi traders,

USD/CAD pair is indeed in an uptrend but it made a deep bearish correction during the last two weeks… Actually, this correction is part of wave 4.

We will review different scenarios as the pair can either bounce for a bearish correction continuation or bounce for the bullish direction and start wave 5.

This article will discuss the wave perceptive and expected scenarios for the pair during the coming days using wave pattern, support and resistance, and SWAT software.

USD/CAD Price is Near to 61.8% Fibonacci Level

As shown in the below chart, the pair is moving in a strong uptrend and has made deep correction as part of wave 4… The pair is now between 50.% and 61.8% Fib level which is a very critical zone for either a bullish bounce and start of wave 5 OR a bearish breakout. In case the bearish move continues and price breaks below the 61.8 % Fibonacci level, then expected wave 4 pattern is invalidated… Here are the main conclusions:

  • Wave 4 must not exceed 61.8% Fibonacci level.
  • looking for a bouncing price action at this zone.
  • If price breaks the 61.8% Fibonacci level which is the maximum correction of wave 4, it will go into the price territory of wave 1, and this pattern will not be valid.

So I expect that there is one more higher high to achieve wave 5 targets so we will wait for buy signals to appear… I will skip any sell opportunities as it does not match the expected wave pattern.

USD/CAD SWAT CHART

Now its time to use the SWAT 4-hour chart to determine the entry points according to the expected wave patterns… Here are the main conclusions to consider:

  • Need a strong bullish candle to close above the 21EMA and 144EMA.
  • Also, need the price to break the trend line.
  • Seems to me that the price is making an inverted head and shoulders pattern.

So in my view, traders should wait for the confirmation before trading this pair. That is what I will be doing in any case.

Good trading,

Ahmed

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