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USD/CAD Reaches 1.24 Target

USD/CAD Reaches 1.24 Target

Jeremy Wagner, CEWA-M, Head of Education


USD/CAD reached the longer term target of 1.24 on Thursday and may be working on a bounce higher. Since May 8, we have been anticipating a top in place for USD/CAD and now that the pair has reached the 1.24 level, a counter trend bounce may be in the early stages higher.

The 1.24 hand showed two wave relationships showing up the area.

First, the 61.8% extension of the January 2016 to May 2016 down trend projected to 1.2399. Secondly, within the current down trend that began May 2017, there is a 2.618 extension near 1.2475. With two different wave projecting wave relationships near the same level, a reaction higher is likely.

The depth and shape of the bounce will alert us if the downtrend is over or if it is merely taking a breather. It would be considered normal for the bounce higher to work back towards the 1.28 handle. If the bounce higher proceeded as a slow grind of overlapping waves, then that would suggest the upward push is corrective and further downside may prevail in the longer term.

There is a red upward sloping support trend line connecting that is nearby. If prices collapse below 1.24 and the red trend line, then the next wave relationships come in near 1.15.

Has the US Dollar been misbehaving according to your analysis? Grab the US Dollar Q3 2017 forecast.

---Written by Jeremy Wagner, CEWA-M

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.