USDCAD recovered in five waves from the 0.9630 low of 2012. We know that five a wave pattern shows us the direction of a primary trend as Elliott Wave theory says.
Therefore, we think that decline from parity that is unfolding for the past two months is just temporary, which means it’s corrective and part of incomplete bullish structure that started back in September.
In fact, corrections are sub-divided by three legs and as long this is the case from 1.0057, we should be aware of a bullish reversal.
Ideally, a pair will find a bottom for wave B) somewhere around 0.9745 level where wave C equals to wave A measured in pips. So once wave B) bottoms, the market could recover back above parity. This outlook remains valid as long as 0.9630 critical region is not breached.
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Chief Technical Strategist