USD/CAD Price Prediction: More downside expected as wave C extends
|- USD/CAD has pulled back within a strong downtrend.
- It will probably continue falling as the wave C of a Measured Move unfolds.
USD/CAD has pulled back within the midst of a strong downtrending move. On Wednesday the pair recouped about half the losses from the previous day and formed a Marubozu Japanese candlestick continuation pattern. These are long red candles that close near their lows.
It is often the case that the market will retrace 50% of the Marubozu, which is what happened on Wednesday. Thursday sees a renewal of weakness so far.
USD/CAD Daily Chart
USD/CAD’s move down from the range high, which started on August 5, looks like an ABC pattern, otherwise known as a “Measured Move” (see labels on chart above). Such patterns are like large zig-zags. The wave C usually reaches a similar length to wave A, or at a minimum a Fibonacci 61.8% of A.
Assuming USD/CAD is in a wave C it will probably continue to unfold despite the present pullback. It should reach at least the conservative target for the pattern at 1.3326, the Fibonacci 61.8% extrapolation of wave A. In a very bearish case it could fall to the zone of the range lows (orange shaded rectangle on chart above).
A break below the low of the Marubozu candle at around 1.3419 would provide bearish confirmation of more downside to the aforesaid targets.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.