USD/CAD Reaches 1.24 Target
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.
---Written by Jeremy Wagner, CEWA-M
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