USD/CAD – 1.3278
USD/CAD – Wave v ended at 0.9407 and a-b-c correction may extend gain to 1.4700
As the greenback has surged again after brief pullback to 1.3411 initially this week and broke above resistance at 1.3535 and 1.3599, signaling the rise from 1.2461 (2016 low) is still in progress and bullishness is seen for this move to bring at least a correction of the fall from 1.4690 (2016 high), hence further gain to 1.3700 and later 1.3750-60 would be seen, however, near term overbought condition would limit upside to 1.3790-00 and reckon upside would be limited to 1.3835-40 (61.8% Fibonacci retracement of 1.4690-1.2461) and bring retreat later.
We are keeping our view that the wave b from 1.0657 (a leg top) has possibly ended at 0.9633 with (a): 0.9800, wave (b): 1.0447 and wave c at 0.9633, the subsequent rise from there is now treated as wave c exceeded indicated upside target at 1.3770-80 and 1.4000 and wave (3) has possibly ended at 1.4690 and wave (4) correction has commenced for retracement back to 1.2832 support, then 1.2410-20.
On the daily chart, our latest preferred count remains that the A of (B) rally from 0.9059 low (7 Nov 2007) unfolded into an impulsive wave with i: 0.9059-1.0380, ii ended at 0.9819, iii at 1.3019 followed by triangle wave iv at 1.2026 , then wave v formed a top at 1.3066 and also ended the wave A. The wave B is unfolding as an double three a-b-c-x-a-b-c and is sub-divided as a: 1.2192, b: 1.2716 and wave c at 1.0784, followed by wave x at 1.1725, another set of a-b-c unfolded with 2nd a at 0.9931, 2nd b at 1.0674. the 2nd c has possibly ended at 0.9407, therefore, consolidation with upside bias is seen for major correction, indicated target at 1.3900 had been met and gain to 1.4700 would follow.
On the downside, whilst pullback to 1.3500-10 cannot be ruled out, reckon downside would be limited to 1.3450-60 and bring another rise later. Only below said this week’s low at 1.3411 would suggest top is formed instead, bring further fall to 1.3380-85 but a daily close below 1.3335-40 is needed to add credence to this view, then test of 1.3262 support would follow, however, key level at 1.3223 should remain intact.
Recommendation: Stand aside for this week and look to turn long on subsequent pullback.
Longer term – The selloff from 1.6194 (21 Jan 2002) to 0.9059 (07 Nov 2007) is viewed as (A) wave which is a 5-waver as labeled on the monthly chart as below, the subsequently rally is labeled as (B) with impulsive A leg of (B) ended at 1.3066, wave B of (B) is unfolding which has either ended at 0.9407 or would extend one more fall but downside should be limited to 0.9200 and 0.9000 should hold.
