USDCAD Elliott Wave Analysis – TradingLounge
U.S. Dollar / Canadian Dollar (USDCAD) – Day Chart

USDCAD Elliott Wave Technical Analysis
FUNCTION: Bearish Trend
MODE: Impulsive
STRUCTURE: Orange wave 3
POSITION: Navy blue wave 3
DIRECTION NEXT HIGHER DEGREES: Orange wave 4
DETAILS: Orange wave 2 appears complete, with orange wave 3 now unfolding.
Wave Cancel/Invalidation Level: 1.44409

The USDCAD daily chart highlights a strong bearish trend within an impulsive Elliott Wave structure. The correction in orange wave 2 seems finalized, giving way to the development of orange wave 3 inside a broader navy blue wave 3 formation. This setup signals the emergence of a powerful downtrend phase, typically marked by robust momentum and sharp price drops.

Orange wave 3 often signifies the most directional and forceful part of the Elliott sequence. With wave 2 completed, the market is now in the heart of the bearish move. Historically, wave 3 exceeds wave 1 in scope and momentum. Current price action aligns with this pattern, suggesting a continuation of the downward trajectory before any corrective pause.

The daily chart perspective affirms the significance of this wave within the broader trend, potentially unfolding into an even more extended move on higher timeframes. Traders should monitor the 1.44409 level carefully—any break above it would invalidate the current wave structure and necessitate reassessment.

Market watchers should focus on classic wave 3 traits: strong directional movement and minimal retracements. This phase supports short positions, with technical indicators expected to reinforce the wave structure as it evolves. Once wave 3 completes, the subsequent orange wave 4 correction could present a temporary counter-trend opportunity. Until then, this impulsive stage is ideal for trend-following strategies.

U.S. Dollar / Canadian Dollar (USDCAD) – 4-Hour Chart

USDCAD Elliott Wave Technical Analysis
FUNCTION: Counter Trend
MODE: Corrective
STRUCTURE: Gray wave 2
POSITION: Orange wave 3
DIRECTION NEXT LOWER DEGREES: Gray wave 3
DETAILS: Gray wave 1 appears complete, with gray wave 2 currently unfolding.
Wave Cancel/Invalidation Level: 1.44409

The USDCAD 4-hour chart reveals a counter-trend corrective structure forming within a broader bearish trend. The currency pair has completed gray wave 1's decline and entered gray wave 2 correction, which sits within the larger orange wave 3 downtrend. This suggests a short-term upward move is occurring before a likely continuation of the dominant downtrend.

Gray wave 2 is expected to retrace approximately 38% to 61% of wave 1's decline. This move typically shows overlapping price action and reduced volatility, which are trademarks of corrective waves. The completion of wave 1 has set the stage for this retracement, which could provide a temporary pause before the bearish momentum resumes.

The next projected move is gray wave 3 down, following the end of gray wave 2. This impulsive wave is likely to be the strongest in the sequence and may extend well beyond the low of wave 1. The invalidation point remains 1.44409—a break above this level would necessitate a review of the wave count and trend structure.

Traders should observe wave 2 for signs of reversal, including common bearish patterns and momentum indicators suggesting overbought conditions. This phase provides a potential entry opportunity for positioning ahead of wave 3’s decline. Confirmation from technical indicators will be vital in identifying the transition from correction to impulse.

This corrective stage is a typical pause in the larger downtrend, giving traders time to reassess and prepare. Monitoring Fibonacci retracement zones will aid in timing strategic entries as the chart shifts from correction back into impulsive action.

Technical Analyst: Malik Awais

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