1.2900 has been a tough nut to crack for USD/CAD bulls. First, they failed to breach it in late-October 2017. Then they tried again a month later, but the attempt was once again unsuccessful. The third try was in mid-December 2017, but after a swift touch of 1.2921, the pair plunged to as low as 1.2249 by January 31st, 2018.
Finally, on March 5th the buying pressure proved to be strong enough to decisively breach the resistance area near 1.2900. Two weeks later, USD/CAD surged to 1.3125 and the bulls were already dreaming of much higher levels, now that 1.29 was out of the way. Unfortunately, their hopes were quickly reduced to ash by last week’s sudden bearish reversal, which saw the pair fall back down to 1.2825 on Friday, March 23rd. The good news is the Elliott Wave Principle was there to help those, who know what to look for. The chart below was sent to subscribers before the open on Monday, March 19th.
A week ago, the hourly price chart of USD/CAD allowed us to see that the recovery from 1.2249 has taken the shape of a textbook five-wave impulse. According to the theory, it was time for a move in the opposite direction. With that in mind we concluded that “a bearish reversal could occur at any moment“. Then this happened:
Some say it was the looming trade war between the United states and China. Or the Fed’s decision to raise interest rates in Jerome Powell’s debut. All we know is that the stage was set for a bearish reversal in USD/CAD much earlier. A price chart and an eye for Elliott Wave patterns was all traders needed to prepare for it.
What would USD/CAD bring this week? That is the subject of discussion in our latest premium analysis due out tomorrow.