[B]Last Price: 1.0298
Posted On: Sep 17th 2007 03:42:00 EST | 08:42:00 GMT
65% Probable: Attempting to bottom for a few days; CRITICAL 1.0240-65 & 1.0330 / 1.0368-77 [/B]
[B]BOTTOM LINE ::::[/B]A near-term low appears in place.
Our discussion last week was centered on the idea that a consolidation-final run appeared needed till $CAD could muster a more meaningful countertrend rally. In all likelihood, that 4-5 sequence is behind us so its time to bounce.
The 4th wave was a bit more subdued than I forecasted it would be. Or was it? Weve ranged under a lower degree previous 4 at 1.0372 and we subsequently dropped into a low not far from 1.0253. The extent, form and technical condition of this mornings (or should I say night for North Americans) rebound argues that $CAD has started off an important test of highs.
In the next 24-48 hours it will be very important to hold above 1.0240-65. That is the pre-requisite for further strength into 1.0333 / 1.0368-77, initially, 1.0408-1.0449 ultimately. Selling under 1.0240-65 BEFORE a test of 1.0333 / 1.0368-77 is consumed would leave $CAD at risk of accelerating lower towards 1.0205 / 1.0173 / 1.0126. I do not believe this will happen and instead I believe we will gather the strength to head towards/above 1.04, but do not lose sight of the fact that at this stage, a multi-day bounce would be corrective in nature which means that the larger trend points still down.
With respect to the larger trend I think it remains down in wave 5 towards 1.0052-1.0126. There is a possibility to already begin a way larger move up above 1.08-1.09 but at the moment I only have some components and not all of those that would allow me to call for an upward reversal of that magnitude. Therefore, this is an idea to keep our ear to the ground for and not the main scenario to play.I would need prices comfortably above 1.0470-1.0580 to have a bigger mouth about more bullish daily chart wave counts.
[B]LAST THURSDAY ::::[/B], Overall it remains my contention that a 4-5 is needed until we can mount a more meaningful bounce in this $CAD thing,
[B]BOTTOM LINE :::[/B]The situation in $CAD continues to deteriorate following that violation of the crucially important 1.0470 level.
This prompt approach of the 1.0334 low following the downside breakout experienced earlier in the week leaves $CAD in a very vulnerable position. Considering a wave [B]5[/B] thrust already underway begins to make quite some sense.
,What should happen, then, in the next few days is a final rout into nearby support at 1.0334-41 / 1.0312 / 1.0276 before a second wave upward correction gets underway. But the important thing to understand is that as of today, we have the confirmation of the fact that the crack of the crucial 1.0470 was the bearish event it had projected to be.
With so many failed rally attempts in the daily time frame, the last 48 hours drop is also to be treated as the beginning of a 5th wave down. It is the 5th wave rout I was so worried about when that 1.0675 support was cracked in mid august. I think it will last several weeks to several months and it will take the Dollar down at 1.00-1.02 before anything else happens at the larger degrees of trend,