• USD/CAD retreated from its September 25 low.
• The correction that occurred appears to be over and the pair may be susceptible to a recap.

USD/CAD suddenly changed course in the middle of a mighty downtrend and rebounded on September 25. The pair quickly rose from 1.3420 to 1.3539, but the rebound now appears to have stalled after peaking at a similar level for the last two consecutive days (blue box on the chart below).

USD/CAD daily chart

There is a chance that the correction is over, and given the continued medium-term bear trend, prices may now start to fall again.

A move below 1.3457 (September 26 low) would confirm a resumption of the downtrend, likely at least to the September 25 low of 1.3420. A close below would be bearish confirmation of further declines in the lows of the range – the zone starting around 1.3222 and ending at 1.3106.

The USD/CAD pair appears to have formed a huge zigzag pattern known as a Measured Move since the August 5 high. If so, this bodes bearish for this pair as the downside target for the last wave C of the formation is minimal at 1.3326, a 61.8% extension of the Fibonacci wave.