USD/CAD – 1.0207

Recent wave:  Only wave iii of c has ended at 0.9931

Trend:  Sideways

Original strategy : 

Sold at 1.0190, stopped at 1.0240

New strategy  : 

Stand aside

Although the greenback dropped below previous support at 1.0191 (we sold on break of this level), lack of follow through selling and the subsequent rebound from 1.0180 suggest consolidation would be seen, however, only above 1.0280/85 (61.8% Fibonacci retracement of 1.0345 to 1.0180) would suggest low is possibly formed and bring stronger rebound to 1.0320/25 later. Looking ahead, it is necessary to see a break of resistance at 1.0380 would signal recent fall has ended as the d leg and bring a stronger rebound later this week.

On the downside, below said support at 1.0180 would extend weakness to 1.0140/50 but only below support at 1.0108 would shift risk to downside and signal the wave iv has possibly ended and extend weakness to 1.0050, then towards 1.0000.

We are keeping our view that wave iv from 0.9931 is unfolding as a triangle with only a leg of wave iv has ended at 1.0854, followed by wave b at 1.0108 and the rally from there to 1.0674 is the c leg with (a): 1.0494, (b): 1.0247 and (c) 1.0674, d leg from there may extend marginal weakness but reckon 1.0108 support would contain downside, bring e leg rebound later.

We would stand aside in the meantime.

On the upside, break of 1.0509 resistance would confirm d leg has ended, then stronger rebound to 1.0565/70 would follow but price should falter well below strong resistance area at 1.0674-80.