Later this week, Bank of Canada releases their latest round of interest rate announcements. As we await BOC, what can we plan for regarding USD/CAD price action?
The Elliott Wave model we are following suggests the longer term trend is still pointed lower. However, in the shorter term, USD/CAD may continue to work higher into the 1.27-1.31 range. We are anticipating this rebound higher to be a partial retracement relative to the May 2017 sell off.
In Elliott Wave GPS depicts USD/CAD may be in wave 2 of (C). For those unfamiliar with Elliott Wave, ‘C’ waves unfold as five wave moves, unless they are ‘C’ waves of a triangle. We are definitely not in a ‘C’ wave of a triangle. Therefore, we can anticipate three more waves to unfold to lower levels.
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Additional Reading: Elliott Wave Patterns – What is a zigzag?
Trading USD/CAD through the Bank of Canada rate announcement may be tricky. Since we are not near any significant retracement levels, it may be best to stand aside and let price action develop further. (If you wish to join DailyFX for the live news coverage of BOC, join the webinar presentation.)
A break below 1.2453 on USD/CAD would create a lower low. At that point, we will need to inspect the wave picture more closely for symptoms of a top.
As a result, entertaining a cross pair including CAD may be an opportunity through major news. Our independent study of EURUSD, for example, implies we may see that market grind higher. Since we are anticipating USD/CAD and EUR/USD to move higher, then a bullish EUR/CAD bias may be warranted. Use simple technical analytical tools like support and resistance levels to identify points of entry. One such breakout opportunity is approaching near 1.49.
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---Written by Jeremy Wagner, CEWA-M
Jeremy is a Certified Elliott Wave analyst with a Master’s designation. This report is intended to help break down the patterns according to Elliott Wave theory.
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