Big, bearish reversal unfolding in the loonie

USD/CAD has been trading quite aggressively lower for the last couple of weeks after a decisive break through the rising trendline connected from May 2015 lows, which is important evidence for a change in trend.

That said, price of USD/CAD is now likely going even lower as we assume that this is now wave A/I; first wave of a minimum big three waves of decline from 1.4680 high. But nothing moves in straight lines so we need to be aware of a corrective bounce up in wave B/II which may retrace even to 1.3300-1.3450 once current blue wave five is finished, around 1.2500 area.


USD/CAD - daily

On the lower time frame, USD/CAD hit new lows as expected after bounce to 1.2300 proved to be a corrective rally that was made with three waves. It was red wave 4) that belongs to an ending diagonal which is now in last leg of decline. However there is still room for 1.2550 area where we will pay attention to an impulsive turn. Five waves up back to around 1.2900 would be strong evidence of a completed decline.


USD/CAD - 4hr

About the Author

Gregor Horvat, based in Slovenia, has been in the forex markets since 2003. He is a technical analyst and individual trader who has worked for Capital Forex Group and TheLFB.com. He also is founder of forex services on www.ew-forecast.com.