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Flat Formation In Usdcad ~ forex trading club reviews
If there is a market that is affected by the international oil price , it is the usdcad. The current fall in oil price propelled Usdcad to a very high level, one that many people might not have seen.
From the economic point of view, united stated as the largest oil consumer in the world could afford to buy more than triple of oil with the same price.
This has helped saved so much money and USD (United State dollar) has gained very significantly. Little wonder it strengthened over almost all major currencies.
Also, the greatest strength of the USD was clearly seen against the CAD (Canadian dollar) as the later weakened even on its own.
Canada are not only US’s closest neighbor, but the largest supplier of oil to the US economy and this business relationship is fostered greatly by the price of oil.
When Oil rises in value, Canada laughs while the US frowns .When it dips in value, the reverse is the case.
This singular act has brought about a negative correlation model between the Oil market and the UsdCad market and that’s why in the last 6-7 months while Oil price dipped, the Usdcad was soaring and breaking more resistive levels.
At the beginning of this year, I posted an article on this blog about my view on the movement of Usdcad from the technical point of view.
You can read here
I forecast a probable reversal at 1.1890-1.1920 but the strength of the Usdcad was so powerful that this important resistive region was broken with ease and price now sits comfortably above 1.2500.
I will continue from that analysis
On the weekly chart, what we are currently having is a flat corrective pattern which is completing at a strong resistance.
The 5thwave of the C leg ( an impulsive 5-wave move) is formed at 1.618 projection of the 1st wave from the 4thwave. The flat pattern is also resting at a 50% retracement of the super wave {1}.
If this analysis holds, we should expect a big dip in the price of Usdcad from wave {2}and probably Oil price will rise in the first half of this year.
I have the deep gladness of following this currency pair since July 2014 almost flawlessly; involved in almost the major and minor moves up and down using intraday and long term Elliot wave analysis; while still maintained the bullish bias.
In the last comprehensive analysis ,I forecast a move to 1.1850 and price has not stopped moving up since. A good trader must be as dynamic as price itself.
I had to take on a new idea. I present to you another analysis that could turn to be a compass for Usdcad movement in the first half of 2015.
Starting with the long term chart, it is very clear how a bearish impulsive move that started in January 2002 ended with a “truncation (this happens when the fifth wave doesn’t go beyond the starting swing of wave 3)” in August 2011 ( a period of nine and half years). Price has since that time been correcting as expected.
The ending of the first leg ( a clear impulsive move) of this corrective move is what I discussed in the November 20 forecast. We have seen price rally well. The rally could end soon. How soon?
Let’s take a look at the lower time frame for a closer look.
Price has formed three successful waves as part of the impulsive move to terminate the first leg of the bullish correction mentioned in the long term analysis above.
The fourth is presently forming- a likely flat (flag) corrective formation, which when broken should complete the impulsive move.
If this flag is broken upside, 1.1750-1.1800 resistive region could contain the rally and send price down in a probable move to 1.06xx region and below.
If price refuse to break the channel and dips below the channel line, it could mean that the fourth wave is going to be a complex correction which should stay above 1.1460 to make this wave analysis valid, otherwise, we might be forced to come up with something different to explain what price is doing.
I will update you as it goes.
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