ANALYSIS SUGGESTS A FURTHER DOWNSIDE ON USDCADIn the chart above, we could see the price breakout of a w-x-y-x-z corrective structure trendline and made an impulsive move to the downside.
According to Elliot Wave theory, a three-wave correction in the opposite direction follows every impulsive move after which price resumes in the direction of the impulsive.
In USDCAD's case, it seems to unfold as a w-x-y double zigzag corrective pattern in wave ii, and the price has the potential to resume lower in wave iii and extends to 1.618% of wave i.
Tuesday's daily price action also close as a long tail pin bar from a resistance level; this also further validate the potential weakness in the days ahead.
Minor and main invalidation levels are indicated on the chart. If price trade above the minor level, it means that the corrective structure is not yet completed and the short bias is still valid.
However, movement above the main invalidation level ruined the entire setup and invalidated the bearish outlook.
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