The USD/CAD pair is trying to close the gap.

USD rose significantly against CAD last Friday, updating local highs of September 4. The reason for the growth of “bullish” activity was the news around the US-Chinese trade conflict.

The pair may grow.

On the 4-hour chart, a downward correction of the higher level developed as the wave (2), and the formation of the wave (3) began. Now, the first wave of the lower level i of 1 of (3) has formed, a local correction has ended as the wave ii of 1, which has taken a shape of an irregular flat, and the development of the third wave iii of 1 is beginning. If the assumption is correct, the pair will grow to the levels of 1.3432–1.3564. In this scenario, critical stop loss level is 1.3138.

On the 4-hour chart, the pair is trading in the upper Bollinger band. The price remains below the EMA65, EMA130 and SMA200 that are directed down. The RSI is growing, having broken out its longer MA. The Composite is forming a Bearish divergence with the price.

USD went down against CAD one after a protracted growth. For more than a month, the US currency has strengthened amid growing demand and weak macroeconomic statistics from Canada.

On Thursday, the USD/CAD pair managed to break its lows amid the publication of macroeconomic indicators favorable for the US economy. Continuing Jobless Claims fell to 1.662 million (data from August 23), labor costs fell by 2.6% in the second quarter of this year, ISM Sector PMI rose to 56.4 points and production orders in August rose by 1.4%.

On Monday, the USD/CAD pair grew but on Tuesday it was sharply corrected downwards after the poor US Manufacturing PMI data release. In August, it unexpectedly fell to the minimum since 2016 at 49.1 points and entered went the stagnation zone, so the market is threatened of a recession in the US economy gain. US business executives continue to be alarmed by the US-China trade dispute.