USD/CAD – 1.3012
USD/CAD – Wave v ended at 0.9407 and a-b-c correction may extend gain to 1.4700
The greenback met renewed selling interest at 1.3348 and has dropped sharply since, adding credence to our bearish view that the decline from 1.3794 top is still in progress and bearishness remains for test of previous support at 1.2969, however, a sustained breach below there is needed to retain downside bias and suggest the rebound from 1.2461 has ended at 1.3794 (tentatively wave b top), hence further weakness to 1.2900 and later 1.2850-55 would be seen but near term oversold condition should prevent sharp fall below previous support at 1.2763, risk from there has increased for a 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 1.3090 cannot be ruled out, reckon upside would be limited to previous support at 1.3165 (now resistance) and bring another decline later. Above 1.3260-65 would defer and risk a stronger rebound to 1.3300 but said resistance at 1.3348 would remain intact, bring another decline later.
Recommendation: Sell at 1.3150 for 1.2950 with stop above 1.3250.
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.