USDCAD prices have seen a short-term upside since last month’s low of $1.2415.
However, the mini-rally is likely part of a correction in wave 2 of a 5-wave impulse towards fresh multiyear lows.
The correction in wave 2 could last a little longer, given wave two corrections usually retrace at least 61.80%. This should bring the market around to the $1.2650 zone, where further guidance will reveal itself.
The medium-term structure could complete cycle wave x and reverse towards the $1.45 level in the long term. But for now, it hints at a recent completion of wave (4) of Ⓒ.
If bulls push prices past the descending channel’s upper trendline, the probabilities of bearish continuation will decrease. Contrary, an alternative scenario could happen, and that is a bullish impulse.
The impulsive scenario should receive validation on a triangle formation in wave 4.
Only a symmetrical triangle would complete the structure above wave 1, which is a requirement for 5-wave impulses.
In addition, we might receive a running flat. However, this structure would appear in the medium-term, following a break of the channel.
A bullish impulse could send prices soaring toward $1.45 as the cycle degree correction in wave x would be, in this case, complete.