USD/CAD ?? Bullish Impulse Confirmed ? More Upside Ahead

3 min read
HubertM

HubertM

Author

Dear Traders,

The USD/CAD surged higher over the recent trading days, as suspected in previous analyses.

Momentum is strong and there is room for more upside.

This analysis will provide a brief update on the unfolding price action of the USD/CAD.

Price Confirms Wave 3…

The swing which started on Feb 16 has pushed up and elongated, making a very good case for green Wave 3 to be in progress. The main target for green wave 3 is the 161.8% Fibonacci level relative to the size of wave 1, which puts the target around 1.3150.

…but Pullback Could Be Around the Corner

The first indication that peak momentum of green wave 3 is reached can be seen in the subtle divergence between the Fisher indicator versus the Awesome Oscillator. The Fisher is a more sensitive momentum indicator and therefore useful for validating internal waves of larger waves. In this case, we see that the AO is at a peak, while Fisher is already creating a lower peak than previously (see chart). This often occurs when an internal wave 5 of 3 is being approached and should be seen as the first warning sign that a Wave 4 correction could be about to start. Wave dimensions would be very neat for the start of pink wave 4 around current levels. However there is always the potential for wave 3 to extend further, in which case the aforesaid divergence is not valid.

In terms of trade setups, it is probably best to wait for a wave 4 correction before considering new buy positions.

All the best along your trading journey

Hubert

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