USD/CAD – 1.2475
USD/CAD – Wave v ended at 0.9407 and only wave (3) of c ended at 1.4690 and one more rise cannot be ruled out.
The greenback has continued heading south after recent selloff, adding credence to our bearish count that wave b has ended at 1.3794 and wave c has commenced for a retest of wave a trough at 1.2461, break there would provide confirmation and encourage for the major fall from 1.4690 (wave (3) top) to extend further fall in wave c of (4) to 1.2390-00, then towards 1.2300, however, near term oversold condition should limit downside to 1.2200-10 and price should stay above 1.2000 level, bring rebound 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 upside, whilst initial recovery to 1.2640-40 cannot be ruled out, reckon upside would be limited to 1.2700-05 and price should falter below resistance at 1.2771, bring another decline to aforesaid downside targets. Above previous support at 1.2859 would defer and risk a stronger rebound to resistance at 1.2944 but upside should be limited to psychological resistance at 1.3000 and price should falter well below another previous support at 1.3165 (now resistance), bring another decline later.
Recommendation: Sell at 1.2700 for 1.2400 with stop above 1.2800.
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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.
