USD/CAD: Structure Breakdown and Trade Setup
What the Current Structure Shows (Primary Scenario)
Wave 3 Complete at Key Support: On the 4-hour chart, it appears that wave 3 of a larger impulse has just finished, finding support at the 1.618 extension of wave 1—a classic Elliott Wave relationship for a third wave. This is a strong sign that the impulsive decline may be pausing for a correction.
Clues from Wave Structure: The steepness and extension of wave 3 of 3 stand out, fitting the textbook expectation that the third of a third is usually the most powerful and extended. Notice also how waves 2 and 4 within wave 3 alternate in form—wave 2 was a zigzag, while wave 4 was a flat. This alternation is a hallmark of a well-formed impulse.
What’s Next? If wave 3 is indeed complete, a corrective wave 4 should unfold. Typically, wave 4 retraces to the 38.2% level of wave 3, which also coincides with the termination of the previous fourth wave of a lesser degree—a high-probability reversal zone.
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