USD/CAD Elliott Wave: 2nd Wave Top

Executive Summary

• USD/CAD appears to be in the beginning stages of a third wave decline at multiple degrees of trend.
  
• Trend bias is bearish, with wave (iii) targets near 1.32 and possibly 1.28.
  
• A move above 1.3870 would invalidate count as listed below and likely point towards the red alternate count.

USDCAD has been consolidating near its recent highs. It is possible to count a completed rally and a bearish pivot to retest 1.3549.

Current Elliott Wave Analysis

The 4HR price chart shows USDCAD formed a potential Elliott wave bearish 5-3 pattern, beginning from the 1.3967 March 31 2026 swing high. The initial decline from 1.3967 to 1.3549 is best counted as a bearish impulse pattern. This has been followed by a choppy and sloppy overlapping rally as a corrective bounce wave (ii).

If this count is correct, then USDCAD may be on the beginning edges of declining in wave (iii). Third waves tend to be the longest and strongest of the Elliott wave sequence and this trend would have significant downside targets if correct.

First, regarding the structure, the rally from 1.3549 has conformed nicely to a parallel price channel. USDCAD prices have been sitting consistently in either the top half of the channel or the bottom half with the purple dotted midline acting as support and resistance.

After reaching the top of the channel at 1.3869, prices have reversed immediately to the bottom support line and bounced back to the midline.

The high from today at 1.3854 reached the 78.6% Fibonacci retracement of the decline over the past week.

This is a common wave relationship for a market that is in the process of reversing lower.

Once wave (iii) gets going to the downside, the next Fibonacci extension to keep an eye on is 1.3206 where (iii) would be 1.618 times (i). The next wave relationship is at 1.2812 where (iii) would be 2.618 times (i).

The key level for this bearish forecast is last week’s high of 1.3870.

Bottom Line

USDCAD remains positioned for a renewed downside trend from the 1.3870 high. Unless price breaks above 1.3870, rallies remain corrective, with 1.28 → 1.32 as the high-probability termination zone for wave (iii).