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USDCAD Long-Term Wave Analysis


Long-term, the USDCAD pair shows a corrective sequence. During this year the pair eases 2.70%. In this post, we’ll review what to expect from Loonie for the coming weeks.

The big picture

The USDCAD weekly chart shows the corrective sequence started in the January 2016 high, when the pair reached the 1.46899 level. The first decline, developed in a 5-3-5 structure of the primary degree, found support at 1.20613 in September 2017. The completion of the zig-zag Elliott Wave pattern is part of a wave A of cycle degree. Once finished the first bearish leg, the Loonie made a recovery until the end of December 2018 at 1.36648. This move suggests the end of a wave B of cycle degree and the begin of a new bearish leg.

Currently, the price structure suggests that the USDCAD is running in a wave C of cycle degree and a wave C of primary degree. If you remember, wave C has a five waves internal structure. In the long-term, we foresee a decline at least to the September 2017 low at 1.2061.

Reading the institutional activity

From the US Dollar futures (ICE-US:DX) activity reported on the last CoT, we observe the increase for the second consecutive week of short positions. The increase of 8.67% from short positions, makes us expect the possibility of weakness for the US Dollar. On another hand, the Canadian Dollar (CME:6C) traders, reduced their long and short positions simultaneously. This reduction provides us with a clue for a limited upside for the coming days for the USDCAD pair.

On the USDCAD daily chart, we observe the potential scenario of a marginal upside to the area between 1.33774 and 1.34322. After this, the 6C traders could be interested in to activate their long positions. In consequence, the USDCAD pair should gain bearish momentum.


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