It has been some time since I have talked about the USD/CAD cross, but now might be a good time to do it and try to answer if wave iii of 3 up has begun.
The above chart is the daily chart back from the bottom on November 7 - 2007 at 90.56. Wave
1 or A is clearly a five wave rally followed by a big down-correction wave
2 or B, which has retraced 78.6% of wave
1 or A the minor rally from April 21 -2010, which I have labeled wave 1 or A is a bit tricky, as all waves overlap as they would do in a correction, but it could well be a expanding Leading Diagonal (see the hourly chart below for details). Wave 2 has almost retraced 78.6% of wave 1 and seems to have finished, which means we are in the very early stages of wave i of 3 up.
A break above the key-level at 106.78 would add confidence in this count.
Where can we expect wave 3 to end? I would expect wave 3 to extend and become at least 1.618 time longer than wave 1, which should make wave 3 hit 116.40. Wave
3 or C of one lager degree should carry prices all the wave up to at least 139.50, where wave
3 or C will be equal in length to wave
1 or A.
The right shoulder of the inverted Shoulder/Head/Shoulder bottom could be done with the test of 101.23. If so we should soon see a break above 102.02. A break above the S/H/S neckline at 103.79 is needed to trigger the formation for a rally higher towards 107.89.
An inverted Shoulder/Head/Shoulder bottom might be building. A break above the neckline at 103.79 will activate the pattern for a move to at least 107.66.
As you know I have never liked the triangle concept. The break below 102.69 gave the triangle concept some credence, but with the break back into the triangle today in my view was the final kill of that possibility.
It's still very early, but it seems as support near 102.54 yesterday held and we are now in the very early stages of wave iii up, which should break above key resistance at 108.59 at some point.
USD/CAD yesterday tested its minor supportline near 102.54 (it acturly broke it slightly), which might be a sign, that the decline from 106.77 is maturing.
Not much is happening here. The cross is still treading water in a narrow range, which will soon have to end. At first eyesight it does look like a triangle, but a triangle just doesn't fit the picture. A more likely scenario (my preferred) is, that we are tracing out a series of waves one's and two's, therefore I'm looking for a break above 106, 106.77 and more importantly 108.59 that would accelerate this crosse higher towards at least the 117 area.
It has been some time since I have talked about the USD/CAD cross, but now might be a good time to do it and try to answer if wave iii of 3 up has begun.
