USD/CAD Mid-Day Outlook

Daily Pivots: (S1) 1.2316; (P) 1.2390; (R1) 1.2474; More.

USD/CAD's recovery from 1.2125 continues today and as discussed before, firm break of 1.2478 will affirm the case that correction from 1.2984 has completed at 1.2125, contained by 1.2098 as expected. In such case, further rally should be seen to retest 1.2984/3015 resistance zone. However, break of 1.2098 support will dampen this view and indicate that consolidation from 1.3015 is still in progress and deeper decline should be seen to retest 1.1464 before completion.

In the bigger picture, preferred interpretation of the up trend from 0.9056 is that first wave rally is completed at 1.0248. Subsequent second wave consolidation was in form of triangle and finished at 0.9823. Rise from 0.9823 is treated as third wave rally and should have completed at 1.3015 already. Hence, some medium scale consolidation might be seen now. However, note that firstly, downside of such consolidation should be contained by bottom of the fourth wave in a lower degree at 1.1304. Secondly, sustained break of 1.3015 will confirm that the medium term up trend has resumed, with the fifth wave started and should then target 61.8% retracement of 1.6196 to 0.9056 at 1.3469.

Though, note that sustained break of 1.1304 will indicate that the fifth wave as likely completed at 1.2984 already. In other words, whole rise from 0.9056 has possibly completed too. Deeper correction should then be seen in such case.

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