EUR/CAD Elliott Wave Analysis

EUR/CAD – 1.4725

EUR/CAD: Wave (A) from 1.7509 ended at 1.5186 and (B) at 1.6010

As the single currency slipped again after brief rebound to 1.5034, we are keeping our view that the wave (B) ended at 1.6010 (with a short c) and wave (C) is still in progress with first leg of (C) about to end soon and whilst weakness to 1.4637 (50% projection of 1.6010 to 1.4929 measuring from 1.5177) is likely, reckon downside would be limited to 1.4509 (61.8% projection) and bring rebound in wave ii of (C) later.

Our preferred count that larger degree wave [C] from 1.3289 has ended at 1.7509 in Dec 2008 with (A): 1.6325, (B): 1.4719 followed by wave (C) at 1.7509, hence wave [D] (also a 3-legged move) has taken place from there and (A) leg was a diagonal triangle with a: 1.7509-1.5642, b: 1.6973, c: 1.5346, d: 1.6329 and e leg ended at 1.5186. The wave (B) ended at 1.6010 with a: 1.6096, b: 1.5231 and a short c at 1.6010, as indicated above the wave (C) is now unfolding in wave i and should extend to 1.4637.

On the upside, above 1.5034 would suggest a low has possibly been formed and risk test of resistance at 1.5177 (minor wave 4th), break there would indicate the wave i has ended, then wave ii correction to 1.5300, then 1.5400 would be seen, however, reckon resistance at 1.5600 would hold, bring wave iii selloff later.

On the bigger picture, our long-term count on the monthly chart is that a big sideways triangle consolidation is taking place from 2000 low of 1.2557 and is labeled as follows: [A]: 1.6976 with (A): 1.4513, (B): 1.2612, (C): 1.6976, [B]: 1.3289 is a double three with 1st a-b-c: 1.5384, x: 1.6709 and 2nd a-b-c: 1.3289. As indicated above, the wave [C] has ended at 1.7509 and [D] leg is under way with (A) leg of [D] possibly ended at 1.5186 or may extend to 1.4901 (61.8% Fibonacci retracement of wave [C]) but support at 1.4719 should hold. In the event euro rises above 1.6973 resistance would suggest the [C] leg is still unfolding and retest of 1.7509 cannot be ruled out but break there is needed to extend rise to 1.8000.