FX.co ★ USD/CAD analysis for August 05, 2013

USD/CAD Elliott Wave
Since our last analyses the USDCAD pair has been trading upwards, just like we expected. Corrective wave .5 (coloured red) of the bigger wave A (coloured blue) has been developing. During the Friday's London session we could observe descending movement from 1.0400 towards the 1.03371 level and we can consider this move as the end of the .4 wave (coloured red). Therefore, during the New York session when development of the final wave .5 starts this major currency has started to push higher and the price has retraced back to 1.0394 level. At the moment, the price is trading around 1.0390 and we expect to see the continuation of the bearish movement for the next few sessions. In accordance with our wave rules and taking into account that wave B should retrace 50% of wave A, so we can define the potential targets with measuring wave A with take profit at 1.0322 (50% of wave A). To reduce the risk, we can use invalidation point at 1.0425 level as stop loss.

Support and Resistance
(S3) 1.0289 (S2) 1.0313 (S1) 1.0353 (PP) 1.0377 (R1) 1.0417 (R2) 1.0441 (R3) 1.0481

Trading forecast
Proceeding from Elliott Wave rules today, the trend is expected to begin the downwards movement. That is why short positions at the level 1.0380 with stop loss at 1.0425 and take profit at 1.0322 are recommended.