The USD/CAD currency pair is presently working through a complicated W–X–Y correction pattern. Recent movements on its 4-hour chart strongly confirm this trend. This pattern is an example of Elliott Wave Theory. It consists of two easy-to-spot corrections, W and Y, which are joined by a very small upwave called X. Analysts feel USD/CAD is nearly done with the last subwave of its corrective pattern. They are predicting a possible near-term top of 1.4150.
On November 10, our most recent live webinar, went deep into how the USD/CAD pair operates. These recommendations were based on a deep dive into its current market dynamics. Today’s price action displays an impressive rejection from the top end of its corrective channel. This just goes to show you how important the channel could be to the pair’s long-term directionality. What outside observers are calling more important is the fact that such reversals often indicate major changes in market sentiment and trajectory.
This W–X–Y corrective structure is actually a double-three corrective pattern—a neat little zig-zag-shaped pattern that lies at the heart of Elliott Wave Theory. Armed with this analytical framework, traders and analysts can dissect market movements in a more systematic, constructive way. With the W–X–Y structure of the USD/CAD pair, we can see that it has made two simple corrections. The supplemental connecting wave further deepens the look at where it all might be headed.
The corrective channel is a big part of the story behind USD/CAD’s bad recent performance. The top side of this gap has formed a key zone of resistance, at which bullish momentum ran into hurdles. As the pair approaches the 1.4150 mark, traders are closely monitoring its behavior to determine potential breakout opportunities or further corrections.
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