USD/CAD has been in bearish mode since Friday, which means that move from 1.0243 was actually made only in three waves, so this rally is now part of a larger complex correction, either a flat or a triangle. For now we will focus on a triangle but need to see an evidence of a low around 1.0300 zone and rally back to 1.0468 to confirm idea of a contracting triangle.
On the other hand, if the pair continues straight down in impulsive fashion toward 1.0250 then we will be looking for a flat correction in red wave B where the pair can reach levels beneath 1.0240 and even around 1.0200 before bulls come back in view.
In either case, both patterns are corrective and both suggest that USD/CAD just stopped in larger temporary pause and that sooner or later pair will turn bullish for 1.0650 maybe even 1.0700.
USD/CAD 4h Elliott Wave Analysis
What is a Triangle Pattern?
A Triangle is a common 5 wave pattern labeled A-B-C-D-E that moves counter-trend and is corrective in nature. Triangles move within two channel lines drawn from waves A to C, and from waves B to D. A Triangle is either contracting or expanding depending on whether the channel lines are converging or expanding. Triangles are overlapping five wave affairs that subdivide 3-3-3-3-3.
- Structure is 3-3-3-3-3
- Each subwave of a triangle is usually a zig-zag
- Wave E must end in the price territory of wave A
- One subwave of a triangle usually has a much more complex structure than others subwaves
- Appears in wave four in an impulse, wave B in an A-B-C, wave X or wave Y in a double threes, wave X or wave Z in a triple threes
What is a Flat Pattern?
A Flat is a three-wave pattern labeled A-B-C that generally moves sideways. It is corrective, counter-trend and is a very common Elliott pattern.
• structure is 3-3-5 • wave B terminates about at the level of the beginning of wave A • wave C terminates a slight bit past the end of wave A • appears in wave two or four in an impulse, wave B in an A-B-C, wave X in a double or triple zig-zag, or wave Y in a triple threes