USDCAD Testing 1.0300, Should You Chase It?

  • Euro All-Time High
  • Japanese Yen Wave C Towards 118.00
  • British Pound Breaks Wedge
  • Swiss Franc Correcting to 1.1900
  • Canadian Dollar Registers New Extreme
  • Australian Dollar Reverses at Fibo
  • New Zealand Dollar Small Correction Should Unfold


Commentary: We wrote yesterday that “the EURUSD continues to rally and is approaching the 1.3900 figure. Measured resistance is at 1.3910 (100% extension of 1.3360-1.3719/1.3551). There is potential for a rally to the 161.8% at 1.4132 as well, but likely next week. See our special technical report on the EURUSD from Friday at EURUSD 1.40 for more analysis.” Near term, the 5 wave rally from 1.3778 may have completed wave 3 within the 5 wave bull cycle from 1.3360. If this is the case, then we expect a wave 4 correction to end near 1.3784 (38.2% of 1.3551-1.3928 and former congestion) before wave 5 presses against 1.4000. Again, there is no change to the outlook for higher prices as the trend remains up.

Strategy: Exit longs at market

Commentary: The 5 wave rally from 112.59 shifts focus to the upside. The count that we are presenting today is one that we have been following for quite some time. It has a flat ended at 112.59 as wave b of 2 in an a-b-c correction from 111.59. Wave c is now underway towards the 100% extension of 111.59-117.12/112.59 at 118.12 (this is also close to the 50% of 124.13-111.59 at 117.86). A rally to 118.12 would complete larger wave 2 within the 5 wave bearish sequence from 124.13 and give way to the next leg lower.

Strategy: Flat

Commentary: We presented an alternate pattern yesterday and wrote that “the wedge shape of the rally from 2.0043 could be an ending diagonal in wave C within an A-B-C from 1.9651. It is also possible that the diagonal is wave i within a 5 wave bullish cycle from 2.0043. Either way, a pullback to at least 2.0235 is expected.” Cable dropped to 2.0233 this morning. The decline can be counted as a 5 wave decline so look for at least one more leg lower. Near term resistance is at 2.0294. See GBPUSD Top for additional analysis.
Strategy: Flat

Commentary: The drop below 1.1815 satisfies minimum expectations for the decline from 1.1898. We wrote yesterday that “this decline from 1.1898 is wave 5 in the 5 wave decline from 1.2151 so risk of an upward correction back to 1.1900 or so increases with every tick lower.” That correction appears underway now.
Strategy: Exit shorts at market

Commentary: We wrote yesterday to “favor the downside for a test of 1.0340 as long as price is below 1.0591.” The USDCAD registered a new low at 1.0313 this morning. A major reversal is likely to take place soon so shorts should keep risk tight. This morning?s low tagged the 3 year support line and there is major bullish divergence with weekly oscillators. The wave count is not labeled on this chart but it also suggests that a multi-month (possibly multi-year low) is close. There is obviously no sign of a low yet. We will wait for a 5 wave rally on the intraday chart followed by a 3 wave setback before taking a bullish stand.
Strategy: Flat

Commentary: We wrote yesterday that “the pattern since the 8/27 high at .8333 is certainly corrective but so is the rally leg from .7673 to .8333. The evidence suggests that a large complex correction is unfolding and that there will be one more rally leg (above .8333).” The Aussie has pushed through .8333 and tested the 61.8% of .8870-.7673 at .8413. Potential support is at .8324 but the stalling at the 61.8% warrants a cautious bearish stand against .8437 for a larger turn.
Strategy: Flat

Commentary: The Kiwi structure is unfolding as expected. That is, the rally from .6824 is impulsive (5 waves), indicating additional upside potential. Near term, expect a drop below .7071 to complete a small correction from .7159 before the next advance. A rally through .7272 would possibly complete an a-b-c correction from .6639 (much like the AUDUSD may have already done).

Strategy: Remain bullish, against .6824, target above .7272
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.