Bulls Reclaim Control - Divergence Setup Targets 1,860Canada 60 IndexEIGHTCAP:CAN60jacesabr_realCanada 60: Bulls Reclaim Control - Divergence Setup Targets 1,860 **RECOMMENDED EXIT DATE TO AVOID VOLATILITY:** October 28, 2025 (End of Day) - Bank of Canada interest rate decision on October 29 could inject volatility. This gives you approximately 16 trading days to capture the technical bounce before the policy announcement. The Market Participant Battle: The Canada 60 setup reveals a classic battle where bulls demonstrated superior strength and are poised for price to return to their proven zone. At point 1, sellers attempted to cap the rally around 1,768. However, by point 2, bulls absorbed this selling and defended the 1,757 level. The decisive moment came at point 3, where bulls not only recovered but pushed price to new highs around 1,802, decisively breaking above the sellers' previous resistance at point 1. This breakout confirmed bulls as the dominant force in this market structure. Now at point 4, price has pulled back to approximately 1,755-1,756 - right back to the zone where these proven bulls previously established control. The thesis is clear: we're returning to the participants who won the battle, setting up a high-probability long opportunity as bulls are expected to defend their territory and drive price higher toward the teal target zone near 1,860. Confluences: Confluence 1: Triple Divergence with Oversold Oscillators Price action from point 2 to point 4 reveals a critical divergence setup across multiple indicators. While price made a higher low from 1,757 to 1,755, three key momentum indicators all made lower lows: RSI, MFI, and CVD candles. This triple divergence signals weakening bearish momentum despite the price decline. Additionally, both RSI and MFI have reached oversold territory, historically associated with bounce zones. The OBV indicator touching the lower Bollinger Band adds further confluence, suggesting selling exhaustion. This combination of divergences and oversold conditions creates a powerful setup indicating the pullback is losing steam and a reversal is imminent. Confluence 2: Fibonacci Extension 0.79 Extreme The Fibonacci analysis reveals that a rejection at point 4 would coincide with price reaching the 0.79 extension level - an extreme reading that often marks reversal zones. This technical level acts as a magnet for institutional profit-taking and provides mathematical support for the bounce thesis. The alignment of current price action with this Fibonacci extreme adds quantitative backing to the qualitative price structure narrative. Confluence 3: Anchored VWAP First Deviation Extension The anchored VWAP analysis shows price has extended past the first standard deviation line. Statistical theory suggests that when price stretches beyond the first deviation and returns toward the VWAP mean, it confirms the extension was excessive. If price comes back up to the entry zone, it will have failed to reach the second deviation - a classic mean reversion setup. This failed extension combined with a return toward equilibrium strengthens the probability of continued upward movement from the current level. Confluence 4: Anchored Volume Profile - Developing POC The developing Point of Control from the anchored volume profile reveals significant information. Price has dipped below this POC line, and historically, when price returns above a developing POC after briefly dipping below it, it signals the pullback phase is complete. The POC represents the price level with the highest volume - essentially the fairest price where buyers and sellers have achieved maximum agreement. A return above this level from an extended position below it typically indicates accumulation is complete and directional movement is resuming. This confluence adds volume-based confirmation to the price structure thesis. Web Research Findings: - Technical Analysis: The TSX has demonstrated exceptional strength in 2025, up 21% year-to-date and outpacing the S&P 500. BMO chief investment strategist Brian Belski recently increased his year-end target to 31,500 from 28,500, highlighting "one of the strongest outperformances since 1990." The Canada 60 Index, as the large-cap component of the TSX, tracks this broader bullish momentum. - Recent Economic Data: Canadian inflation came in at 1.9% in August, down from 1.7% in July, remaining well below the Bank of Canada's target. The subdued inflation environment supports continued monetary easing, which historically benefits equity markets. - Analyst Sentiment: Overwhelming bullish consensus on Canadian equities. RBC forecasts 10% earnings growth for Canadian equities in 2025, with analysts citing strong fundamentals despite trade headwinds. Scotiabank strategists note TSX stocks remain attractively valued even after the strong 2025 run. - Data Releases & Economic Calendar: Next Canadian CPI release scheduled for October 21 (September data). Bank of Canada interest rate decision on October 29 - markets pricing in continued rate cuts with the overnight rate potentially moving from current 2.5% toward 2.0% by year-end. - Interest Rate Impact: The Bank of Canada cut rates by 25 basis points to 2.5% on September 17, with further cuts expected. The Federal Reserve also began its easing cycle in 2025. Falling interest rates historically support equity valuations and risk assets, particularly benefiting rate-sensitive sectors like financials - a major TSX component. - Trade Situation: U.S.-Canada trade tensions have been easing. Canada removed most retaliatory tariffs on U.S. goods effective September 1, 2025, except for steel, aluminum, and automobiles. This de-escalation reduces a key headwind that had created uncertainty earlier in 2025. - Market Sentiment: Mining and gold stocks have been particularly strong performers, with gold exceeding $4,000/oz. Financials, another major TSX component, are benefiting from the rate-cutting cycle and strong economic backdrop. The broad-based strength across sectors supports the bullish technical setup. Layman's Summary: Canadian stocks are having an excellent year, up over 21%, and experts believe there's more room to run. The economy is in a sweet spot: inflation is under control, allowing the central bank to keep cutting interest rates (which is good for stocks), and while there were trade concerns with the U.S., those are calming down. The mining sector is on fire thanks to soaring gold prices, and banks are doing well too. Analysts have actually raised their targets for where they think Canadian stocks will go by year-end. The only thing to watch is the Bank of Canada meeting on October 29 - that could cause some short-term choppiness. Overall, the fundamental backdrop strongly supports the technical long setup, with multiple positive catalysts and easing headwinds. Machine Derived Information: - Image 1 (Narrative Setup): Shows the numbered points 1→4 marking the bull-bear battle. Point 1 established initial resistance around 1,768. Point 2 marked the low around 1,757 where bulls defended. Point 3 broke above point 1 to new highs near 1,802, confirming bull dominance. Point 4 shows current pullback to 1,755-1,756 - the return to proven buyers. Multiple indicators (ribbon MAs, oscillators) visible showing structure. - Significance: Clear visual confirmation of the market participant battle thesis. Bulls broke the sellers' resistance and are now being tested. - AGREES ✓ - Image 2 (Fibonacci Extension): Clean price chart showing the 1→2→3→4 structure with Fibonacci extension levels. The 0.62, 0.705, and 0.79 retracement levels are marked, with current price at point 4 aligning with the 0.79 level. Teal target zone visible around 1,860+. - Significance: Mathematical confirmation that point 4 represents an extreme extension level (0.79) where reversals commonly occur. Provides quantitative support for the reversal thesis. - AGREES ✓ - Image 3 (Anchored VWAP): Shows the numbered structure with black curved Keltner-style channels overlaid. Red moving average visible. The structure clearly shows price extending beyond normal deviation bands and the setup for mean reversion. - Significance: Statistical evidence of price overextension past first standard deviation. Failed reach to second deviation supports mean reversion trade. - AGREES ✓ - Image 4 (Clean Structure): Similar view to previous images showing the 1→4 setup with horizontal support around 1,756. Target zone visible around 1,860. Stop zone below around 1,740-1,750. - Significance: Reinforces the clean technical structure and risk/reward setup. Multiple touches and tests visible at key levels. - AGREES ✓ - Image 5 (First Chart with Indicators): Original chart showing full suite of technical indicators. Upper section shows price with the 1→4 structure. Multiple oscillators below show the divergence setup - particularly visible in the momentum indicators making lower lows while price makes higher lows. CVD and other volume-based indicators visible. - Significance: Comprehensive technical picture showing the multi-indicator divergence that forms the core of the bullish thesis. - AGREES ✓ Actionable Machine Summary: All five images consistently tell the same story: bulls won the battle at point 3 by breaking above point 1, and we're now returning to these proven participants at point 4. The machine analysis confirms multiple technical confluences - divergences across RSI/MFI/CVD, Fibonacci extreme at 0.79, VWAP first deviation extension, and volume profile developing POC dip-and-recovery pattern. Every confluence aligns bullishly with no contradictory signals detected. The visual evidence strongly supports the narrative thesis with clear price structure, well-defined zones, and multiple confirming indicators. Entry at current levels around 1,755-1,756 offers favorable risk/reward with targets near 1,860 and stops below 1,740-1,750. The machine-derived information adds high confidence to the trade thesis. Conclusion: Trade Prediction: SUCCESS Confidence: High Risk/Reward Ratio: 5.5:1 This Canada 60 long setup presents a compelling technical opportunity with robust fundamental support. The trade thesis rests on a clear market participant battle where bulls decisively broke seller resistance at point 1, established dominance with the point 3 breakout to new highs, and are now being tested at point 4. Multiple technical confluences align perfectly: triple divergence (RSI, MFI, CVD) with oversold readings, Fibonacci 0.79 extension extreme, VWAP first deviation overextension, and volume profile POC dip-and-recovery pattern. The fundamental backdrop strongly reinforces the bullish technical setup. Canadian equities are experiencing one of their strongest years in recent history with a 21% YTD gain, and analysts remain bullish with raised targets. The macro environment is favorable: inflation is contained at 1.9%, the Bank of Canada is in a rate-cutting cycle (currently at 2.5%), and U.S.-Canada trade tensions have eased significantly with most retaliatory tariffs removed as of September 1. The dual tailwinds of monetary easing and improving trade relations provide strong support for risk assets. Key Reasons for Success: 1. Clean bull victory at point 3 breaking above seller resistance at point 1 - clear dominant participant identified 2. Triple divergence (RSI, MFI, CVD) with both RSI and MFI oversold - strong momentum reversal signal 3. Fibonacci 0.79 extension extreme reached - mathematical reversal zone 4. Anchored VWAP first deviation overextension - statistical mean reversion setup 5. Volume profile developing POC provides support - volume-based confirmation 6. Bullish fundamental backdrop: rate cuts, strong YTD performance, easing trade tensions 7. Analyst consensus bullish with raised year-end targets 8. Strong sector performance in mining and financials supporting TSX strength Risk/Reward Assessment: Entry: ~1,755-1,756 Target: ~1,860 (approximately 104-105 points gain) Stop: ~1,740-1,750 (approximately 15-16 points risk) R/R Ratio: ~5.5:1 - Excellent risk/reward profile This exceptional risk/reward ratio, combined with multiple aligned technical confluences and supportive fundamental backdrop, creates a high-probability setup. The only notable risk is the October 29 Bank of Canada meeting, which warrants consideration for an exit strategy around October 28 to avoid potential volatility. Final Recommendation: TAKE THE TRADE The confluence of technical precision, favorable risk/reward, and supportive fundamental environment creates an asymmetric opportunity. The trade offers substantial upside potential with defined, limited downside risk. All signals point toward a successful bounce from this proven buyer zone. **RECOMMENDED EXIT DATE TO AVOID VOLATILITY:** October 28, 2025 (End of Day) - Bank of Canada interest rate decision on October 29 at 09:45 ET. Exiting before this event protects against unexpected volatility from monetary policy surprises while allowing approximately 16 trading days to capture the technical move. Analysis Methodology: This analysis uses multiple technical indicators and confluences including trend lines, volume analysis, divergences, anchored VWAPs, dynamic volume profiles, Fibonacci extensions, and oscillator analysis to identify high-probability trade setups. Web research incorporates real-time economic data, analyst sentiment, monetary policy developments, and market fundamentals to provide comprehensive trade context.