Ending Diagonal On USDCAD Indicates A Probable Reversal

22 nov. 2016

USDCAD has been trading higher for the last few weeks, especially since crude oil has turned south. On Loonie we see higher highs and higher swing lows but with overlapping price action between two converging trendlines so pair can be making an ending diagonal as shown on the 4h chart. That's a strong reversal pattern which could send price south this month, maybe already from current levels as we see small break beneath the support line. Based on latest update, invalidation level is above 1.3700, as wave 3) must not be the shortest wave.

The ending diagonal is a special type of motive wave that occurs primarily in the wave 5 position when price has moved too far and too fast. Some ending diagonal triangles appear in the C wave of an ABC correction. In all cases, the ending diagonal terminates the move of larger patterns. They consist out of five waves, with each having three more sub-waves.