FX.co ★ Elliott Wave Analysis of USD/CAD for for February 04, 2014

USD/CAD Elliott Wave
Last week, the USD/CAD pair found the top at the 1.1220 level. From there on, this commodity pair has been trading lower, just as we expected. In the 1-hour chart of the USD/CAD pair, we can observe that we are tracking descending movements from 1.1220 towards 1.070 as potential A-B-C pattern inside the bigger wave [x] (coloured blue), while the price stays below the end of the wave [y], we are going to look for a fresh sell opportunity in the final wave (c) of [x]. In accordance with our wave rules and taking into account that wave [x] should retrace 50% of wave [y], we can define potential targets by measuring wave [y] with take profit at 1.0900 (50% of wave Y). The RSI indicator is likley to stay at the lows while the price is seen to push lower so that we could see an ideal divergence at the end of the (c) wave that will help us to close short position on time.

Support and Resistance
(S3) 1.0967, (S2) 1.1003, (S1) 1.1059, (PP) 1.1095, (R1) 1.1151, (R2) 1.1187, (R3) 1.1243.

Trading forecast
Proceeding from Elliott Wave rules today, the trend is expected to begin downward movement. That is why short positions at the level of 1.1070 with stop loss at 1.1150 d take profit at 1.0900 are recommended.