**USD/CAD Elliott Wave Technical Analysis – In-depth Breakdown**
*Original author: ActionForex.com Contributor*
The US Dollar to Canadian Dollar (USD/CAD) currency pair has shown dynamic price behavior over recent weeks, exhibiting patterns consistent with Elliott Wave theory. This in-depth technical analysis explores the current wave structure, providing traders with a comprehensive outlook based on wave mechanics, support and resistance levels, Fibonacci relationships, and trend dynamics.
As of the latest data, USD/CAD has been experiencing a complex corrective structure in a broad upward trend. In Elliott Wave terms, the pair appears to be completing a larger-degree corrective phase, possibly setting up for a continuation of the dominant bullish wave cycle.
Key Highlights:
– Current Elliott Wave position suggests USD/CAD is in a corrective phase of wave 4.
– Bullish trend likely remains intact, with potential for upward continuation once correction completes.
– Multiple Fibonacci retracement levels provide insight into potential support zones.
– Momentum indicators reveal weakening bullish strength, but the fundamental picture may continue to underpin the upside.
Let’s examine the technical outlook in greater detail.
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**Wave Count Analysis: Breaking Down the Structure**
To understand the probable trajectory of USD/CAD, it is crucial to examine the Elliott Wave count on the recent uptrend that started in 2021.
– The move from the 1.2007 low (June 2021) to the 1.3976 high (October 2022) is labeled as a 5-wave impulse (Wave 1).
– A complex correction followed, known as Wave 2, retracing some of the prior gains but preserving the overall bullish structure.
– The latest upswing from late 2022 toward 2023 is considered Wave 3, characterized by a strong and impulsive movement, peaking around the 1.3860 region.
– Since the peak in Wave 3, the price has entered a corrective phase, likely forming Wave 4.
According to Elliott Wave principles:
– Wave 4 often retraces between 23.6% to 38.2% of the Wave 3 progression.
– As of early 2024, price action indicates that this textbook retracement may already be underway or close to completing.
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**Fibonacci and Channel Support Levels**
Understanding where Wave 4 may complete involves identifying key Fibonacci retracement areas and monitoring traditional chart support levels:
– The 23.6% retracement of the Wave 3 rally occurs near 1.3460.
– The 38.2% retracement resides closer to 1.3300, which also aligns with the previous consolidation zone during the Wave 3 move.
– Channel support drawn from the base of Wave 2 projected along the Wave 3 low also intersects near the 1.3300 level — a critical confluence zone.
These technical levels suggest the following:
– USD/CAD may find strong support in the 1.3300–1.3460 range.
– If prices hold this zone and reverse higher, it would validate the completion of Wave 4 and anticipate the start of Wave 5.
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**Sub-Wave Structure of Wave 4: A Closer Look**
Analyzing the internal count of Wave 4 helps to refine entry timing and risk management:
– Elliott guidelines suggest Wave 4 normally unfolds as an ABC corrective pattern.
– In the USD/CAD context, subwave A is a steep decline, followed by a moderate rebound in subwave B.
– Current price activity may be forming subwave C, which could descend toward the 1.3380–1.3300 support levels.
Anticipating a Wave 5 rally would suggest looking for bullish reversal signals in this projected subwave C target area.
Key traits of subwaves:
– Wave A: Sharp drop indicating strong selling pressure.
– Wave B: Countertrend rally, often confusing for traders.
– Wave C: Resumption of selling but typically forming divergence on
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