USD/CAD is trading higher into wave c) as part of a three-wave rally which is labeled as blue wave iv. T
hat said we see some overlapping activity going on within the current wave c), which means USD/CAD may unfold an ending diagonal within the following trading hours. As such a sharp and swift reversal could be in the cards.
USD/CAD, 1H
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 and they usually suggest sharp reversals.
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