USDCAD has made a five wave of a decline from 1.4683 high which is a very strong evidence for a bearish trend. We are talking about black wave A/I, the first wave of this big new bearish cycle, followed by current slow and overlapping price movement that is either wave B or II. So we know that sooner or later downtrend will resume, but the question is from where. Well, based on recent price developments we see pair headed higher, into final blue leg C, after a triangle correction in blue wave B-circled had been recognized. Ideally this whole corrective rally since April will find a top and a turning point around the 1.3500-1.3880 area.

USDCAD, Daily

Regarding the 4h chart, we can see that USDCAD has been trading higher for the last few weeks, especially since crude oil has turned south. On Loonie we see higher highs and higher swing lows but with overlapping price action between two converging trendlines so pair can be making an ending diagonal as shown on the 4h chart. That's a strong reversal pattern which could send price south this month, maybe already from around current levels as we see the ending diagonal in final stages, with red wave 5) midway through its completion.

Based on latest update, invalidation level is above 1.3700, as wave 3) must not be the shortest wave.

Divergence also indicates a possible reversal lower.

USDCAD, 4H

The ending diagonal is a special type of motive wave that occurs primarily in the wave 5 position when price has moved too far and too fast. Some ending diagonal triangles appear in the C wave of an ABC correction. In all cases, the ending diagonal terminates the move of larger patterns. They consist out of five waves, with each having three more sub-waves.

Basic Ending Diagonal:

Interested in our services? Then visit our homepage at www.ew-forecast.com and take a glace at some of our charts. You can even subscribe to our Twitter account -> @ewforecast