The USD/CAD has been one of the most bullish USD pairs over the last few trading weeks while other currencies still exerted dominance over the dollar. Things are shaping up into a new uptrend in the medium-term.
This analysis will take a look at the recent price-action of the USD/CAD.
Bull Structure is Forming
The pair has been showing strong impulsive price action to the upside since the low of late January. So far everything is pointing towards the early stages of a larger scale 5-wave trend impulse:
- Wave sizes and scales suggest that we are currently witnessing wave 1 (pink) of 3 (green), based on the larger structures of the daily and weekly charts
- Momentum indicators seem to be in agreement with this scenario
- Price has produced bullish bounces at the correct levels for a new uptrend scenario
- Cross-market correlation is not contradicting this scenario
Here is what we expect to happen next:
- Price should create another down-up relative to the last price level shown in the chart above (turquoise wave 4 and 5).
- A bearish pullback towards the area of the 61.8% fib level (1.2550) should then follow (pink wave 2).
- An even stronger bullish bounce must occur around this retracement level to confirm the uptrend scenario. If this happens, the USD/CAD could be targeting levels above 1.3150, which is the 161.8% fib level of green Wave 1.
All the best along your trading journey
Follow Hubert on Twitter