USD/CAD – 1.3312
USD/CAD – Wave v ended at 0.9407 and a-b-c correction may extend gain to 1.4700
Although the greenback retreated from 1.3210, as the pair found decent demand at 1.3056 late last week and has rallied from there, suggesting low has been formed at 1.2969 back in Jan, hence consolidation with mild upside bias is seen for further gain to resistance at 1.3388, however, break there is needed to signal the fall from 1.3599 has ended and extend further subsequent rise to 1.3450-60 but price should falter below 1.3500-10, bring retreat 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 downside, whilst pullback to 1.3250 cannot be ruled out, reckon previous resistance at 1.3210-12 (now support) would limit downside and bring another rise later to aforesaid upside targets. Only a break of said support at 1.3056 would abort and signal top is formed, bring test of support at 1.3009, below there would revive bearishness for retest of 1.2969. Looking ahead, a break of this level is needed to signal the fall from 1.3599 top has resumed and bring further fall to 1.2950, then 1.2890-00 but reckon downside would be limited to 1.2822 support and the pair should stay above another previous support at 1.2763.
Recommendation: Buy at 1.3210 for 1.3400 with stop below 1.3110.
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.