USDCAD Basing for a Rally Back to 1.0173

[DailyFx]

- Euro 5 Waves Complete at 1.4130?
- Japanese Yen Towards 118 as Long as 114 is Intact
- British Pound In Small Wave 4 Consolidation
- Swiss Franc Wave 4 Should End Near 1.1771
- Canadian Dollar Working Towards 1.0173
- Australian Dollar Correcting Back to .8600
- New Zealand Dollar Chops Higher

SEE A DECRIPTION AT THE BOTTOM OF THIS REPORT FOR JTRENDW AND JTRENDD




Commentary: The rally from 1.3360 appears to be in 5 waves and may very well be complete or close to complete. A correction of this rally is expected to unfold soon and bring price back to at least 1.3828. However, from a trading perspective, there is no reason to fade this move until we see a clear decline in 5 waves followed by a corrective setback.

Strategy: Flat


Commentary: There is no change in the call for a return to 118.00. We proposed an alternate count last week that has a triangle unfolding but our favored count calls for an advance in wave C of the A-B-C correction from 111.59 (wave C began at 112.59). The A-B-C is expected to complete larger wave 2 in a 5 wave bear cycle that began at 124.13. 118.12 is the 100% ext. of 111.59-117.12/112.59 (where C would equal A). We are comfortable with this count as long as price is above 113.99.

Strategy: Remain bullish, move risk to 113.99 (from 112.59), target 118.00


Commentary: The bullish count continues to track well and is favored as long as price is above 1.9951. "The decline from 2.0366 is a 3 wave decline and the rally from 1.9879 can be labeled an impulse so that places Cable in a 3rd wave rally now." A bullish objective is at the 161.8% ext. of 1.9879-2.0172/1.9951 at 2.0425.
Strategy: Remain bullish, against 1.9951, target 1 at 2.0425


Commentary: Remember that the larger pattern has the USDCHF thrusting lower from a triangle and thrusts from triangles are terminal. Still, the decline from 1.1922 does not look complete. Allow for a rally through 1.1771 to complete wave 4 within the 5 wave decline from 1.1922 before wave 5 registers a new low (below 1.1677). That would possibly complete the thrust lower from the triangle.
Strategy: Flat


Commentary: Last week, we wrote to "a drop below 1.0004 to complete 5 waves down from 1.0173 would potentially lead to a larger corrective rally back to 1.0173 (former resistance) before a drop to yet a new low." There is no change to this outlook. A rally back to 1.0173 (the 38.2% of 1.0591-.9936 is at 1.0186) would be wave iv of larger wave 3 in the 5 wave bear cycle from 1.0866. A more significant rally is possible and we will assess bullish potential as the advance unfolds.
Strategy: Remain bullish, against .9936, target 1 is 1.0173, target 2 is TBD


Commentary: We maintain that a short term top is in place at .8702 as 5 waves are complete there from .8274. The correction unfolding from .8702 is either complete at .8605) or the decline from .8702 is just the first leg in a more complex correction. In the latter case, price should drop below .8605 (marginally) before the next bullish leg gets underway. We favor this scenario because the rally from .8605 is not an impulse.
Strategy: Flat


Commentary: The Kiwi structure is unfolding as expected. Be careful here though because the first bullish objectives (the 100% ext. of .6639-.7272/.6824 at .7456) has already been hit. The next potential resistance levels are the 61.8% of .8108-.6639 at .7547 and .7589, which is the 161.8% ext. of .6824-.7185/.7005. .7325 is near term support. A deeper correction would potentially test .7227.

Strategy: Remain bullish, move risk to .7185 (from .7005), target .7547/89
JTRENDW uses 13 week RSI in order to gauge strength of trend. The trend is considered Bullish if the indicator registers a reading above 60. The trend is considered Bearish if the indicator registers a reading below 40. If the reading is between 40 and 60, then the reading is Flat. The JTRENDD uses 13 days of data. An example of JTRENDW is below for the EURUSD.