EUR/CAD Drop Likely to Extend
Commentary – We wrote last week that “potential support is at the 78.6% at 1.5896 and the 100% extension of 1.7450-1.6400/1.6852 at 1.5802. This move down should prove terminal and result in the opportunity to get bullish against 1.5473 for a move through 1.7450.” The decline has accelerated and price has dropped below the mentioned objectives. With the drop from 1.6852 appearing incomplete, we rescind the aggressive bullish bias. It is possible that a wave iii is underway that will break below 1.5473. Given the structure in the AUDUSD (expecting a top near .9000), then a very cautious bullish approach is warranted against 1.5473.
Strategy – Flat
Commentary – We wrote last week that “in the very short term, the rally from 1.4010-1.4260 was followed by a fairly clear 3 wave correction to the 61.8% of 1.4010-1.4260 at 1.4106. The strong rally off of the Fibo level inspires confidence in at least a near term bullish stance but this may be the beginning of a much larger rally.” We were completely wrong as 1.4260 ended up being the top of what is most likely wave 2 in a new 5 wave decline from 1.4595. This places the EURCAD in a 3rd wave decline to at least 1.3675 (100% extension) but likely lower towards the 161.8% decline. We will be better able to gauge targets as the decline unfolds.
Strategy – Flat (missed this one)
Commentary – Just as the EURAUD may be coming into at least a short term low, the EURNZD may be doing the same thing. The 61.8% of 1.7029-2.0170 is at 1.8230 and may be strong support and a potential ending point for the a-b-c correction that we think is unfolding from 2.0170.
Strategy – Bullish opportunity against 1.7029 (entry should be close to 1.8230), target is above 2.0170