by Jody Samuels
The USD/CAD is trading at 1.3125 after a one hundred pip move up as a result of weaker retail sales and lower than expected Consumer Price Index (CPI) pointing to weaker growth and lower inflation. Our Elliott Wave Desk wave count has been calling for a weaker CAD$ and today the fundamentals supported the view. Now the question is how likely is the USD/CAD to continue to move higher from a wave count perspective, and what about looking at some of the crosses to support that view as well?
Starting from the Weekly time frame and working down, the USD/CAD is drawing out a nice upward sloping pattern which we are labeling as an ABCDE triangle. We are currently in the orange E leg which will complete red Wave X once done. What that means is, the current swing move is still up and the initial target is the channel line and the 38.2% Fibonacci retracement of the prior swing move at 1.3313. See Weekly chart.
Moving down to the Daily chart, we are currently in the blue c wave which, when complete, will end this swing sequence. Since c waves are 5-wave moves, we can move down to the 4-hour to see how this might play out. But so far it looks good for further USD/CAD strength, especially since the fundamentals are supporting this move. See Daily chart below and notice the large daily engulfing candle, which occurred after today’s news releases at 8 am EST.
Moving down to the 4-Hour chart, we have labelled this swing move up which we have ending at the upper channel line. Notice the new magenta upward sloping channel lines which are drawn for this swing move. This is our wave count and this count invalidates if we trade below yesterday’s lows at 1.3004. See 4-Hour chart below.
What about looking at some of the crosses to express this weaker CAD$ view? I would suggest doing your own analysis on the EUR/CAD and the AUD/CAD, as both show potential for further moves. We always recommend applying your own tools to determine your entry and exit points. Elliott Wave analysis provides the direction, the view and the context. It is up to you to use your strategy to confirm your trades. We can certainly help you with that, as we also have an Elliott Wave strategy that we use so please get in contact with us if you are interested in learning more.
For this week, I encourage you to test your skills with this Elliott Wave analysis while keeping your risk and emotions under control. Have a clear plan and trade your plan. We wish you success in your trading business.