USD/CAD: Should You Buy The Dip?
EWM Interactive | Oct 05, 2015 07:15AM ET
It’s been a little over five months since we published USD/CAD Bulls Are Waking Up. In that article we shared our big-picture outlook, assuming the pair should start rallying again in the face of wave (5) of III, which is supposed to climb above the previous top of 1.2835. The chart below shows how USD/CAD looked like five months ago.
As visible, we were expecting the pair to find support at the 38.2% Fibonacci level, where fourth waves typically end. Where is USD/CAD now? The chart below provides the answer.
The Fibonacci level did a good job discouraging the bears. The pair bottomed at 1.1919 and started rising sharply. On September 29th, the exchange rate reached as high as 1.3457. The bulls must be pretty pleased with this 1500+ pip rally. USD/CAD gave us another evidence of the Elliott Wave Principle‘s ability to predict large movements in the FOREX market. Now what?
As the chart shows, wave III is probably over, which means the recent decline to 1.3110 might be the beginning of something bigger. In our opinion, “buying the dip” is a risky strategy right now, since USD/CAD could already be in its wave IV to the south. If so, the pair might lose another 600 pips or even more.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.