I still see the Canadian dollar (CADUSD) in a major (long-term) downtrend despite the bullish spike reversal posted during December. January followed this move with a bearish spike reversal. If we clear up our view by applying the Wilhelmi Element (the only price that matters is the close) and look at a monthly close-only chart (second chart) we see the major 3-wave downtrend may have come to an end with the November close of 0.78249, meaning the loonie is in the early stages of its next major 5-wave uptrend. The fly in the ointment continues to be monthly stochastics holding above the oversold level of 20%.

Fundamentally, the Bank of Canada has been talking about raising interest rates to combat inflation that reportedly climbed to 4.8% last December. According to a Bloomberg story, this was the highest level since September 1991. If the Bank of Canada were to start its series of slow interest rate hikes it would be expected to provide support to the loonie, confirming a change in long-term trend.