Commentary - We wrote last week that the “declines at varying degrees of trend are in 3 waves, which indicates corrective movements and that the dominant trend is towards higher prices. 1.6400 is near term risk and should remain intact.” Although price remains above 1.6400, the rally from 1.6400 was also in 3 waves, indicating that at least one more bear leg will occur. Potential support is at the 61.8% of 1.5473-1.7450 at 1.6228, 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.
Strategy - Flat, look to buy at mentioned support levels, against 1.5473, target is above 1.7450
Commentary - There is no change to our comments that “the entire rally from the June low of 1.4124 is a correction of the March-June decline.” However, we were expecting a larger upward correction to challenge at least the 38.2% of 1.56833-1.4144 at 1.4718. That has yet to happen. Given that the USDCAD is breaking lower and that the EURUSD appears to be in a 4th correction, a break lower in the EURCAD seems probable.
Strategy - Flat
Commentary - The “structural/potential trendline support near 1.9675/1.9725” that we were expecting to hold did not so we have re-assessed the situation. The best count at this point treats the decline from 2.0121 as wave a in an a-b-c correction. The rally to 2.0190 is wave b (double top) which means that wave c is underway now to below 1.8795 before the next advance takes place.
Strategy - Flat
Written by Jamie Saettele, Technical Currency Strategist of DailyFX.com