USDCAD – Bullish Reversal After Completed Wave 5 and AO Divergen

Analysis:
The USDCAD daily chart shows a textbook completion of an Elliott Wave 12345 sequence. Wave (5) has just completed, supported by clear bullish divergence on the Awesome Oscillator (AO) – a classic signal suggesting exhaustion of bearish momentum.

What strengthens the bullish reversal bias is the presence of a bullish engulfing candle at the end of Wave (5), right at a key structural low. This candle formation, combined with the divergence, provides strong evidence that a corrective wave (likely Wave A or a larger reversal) may be underway.

🔍 Key Confluences:

Wave 5 ends in a falling wedge structure.

AO shows higher low on Wave 5 compared to Wave 3 → Bullish Divergence.

Bullish engulfing candle confirms momentum shift.

Price action breaking out of the wedge pattern.

🎯 Trade Plan:
I am waiting for a pullback toward the breakout zone to find an optimal buy entry. The ideal entry would be a retest of the bullish engulfing candle low or broken wedge resistance, turning into support.

📈 Targets:

Initial short-term target: ~1.3850 (previous Wave 4 region).

Mid-term potential: ~1.4050 depending on structure development.

🛑 Invalidation:
A daily candle closing back below the low of the bullish engulfing will invalidate the bullish outlook.