EUR/CAD – 1.4030

EUR/CAD: Wave 4 ended at 1.4380 and wave 5 as well as circle wave C has possibly ended at 1.2129, major (A)-(B)-(C) correction has commenced and indicated target at 1.6000 had been met.

Euro’s rebound after falling to 1.3784 last month together with the breach of indicated resistance at 1.4132 add credence to our view that a temporary low has been formed there, hence consolidation with mild upside bias is seen for this rebound to bring retracement of recent decline and gain to 1.4250-60 is likely but resistance at 1.4308 should hold from here. Looking ahead, only above this level would indicate recent decline has ended, bring retracement of the intermediate fall from 1.5282, hence further gain to 1.4365-70 and then 1.4440-50 would follow.

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Our latest preferred count is that larger degree wave [C] from 1.3289 as well as circle wave B ended at 1.7509 in Dec 2008 with (A): 1.6325, (B): 1.4719 followed by wave (C) at 1.7509, hence circle wave C is unfolding with wave 1 ended at 1.5186 (diagonal wave 1), wave 2 at 1.6096, impulsive wave 3 has ended at 1.2451, followed by wave 4 at 1.4380, in view of recent strong rebound, we are now treating the wave 5 as well as larger degree circle wave C has ended at 1.2129, hence (A)-(B)-(C) correction has commenced from there with impulsive wave (C) now unfolding and indicated initial upside target at 1.6000 had been met and reckon 1.6500 would hold.

On the downside, expect pullback to be limited to 1.4100-10 and 1.4005-10 should hold, bring another rebound later. Below previous resistance at 1.3960-65 would dampen this near term bullishness and risk weakness to 1.3900, however, still reckon downside would be limited to 1.3850 and 1.3800 should hold, bring another rebound. Only below said support at 1.3784 would signal recent decline from 1.6106 has resumed and may extend further fall to 1.3750-55 (76.4% retracement of 1.3025-1.6106) and possibly 1.3600 but reckon downside would be limited to previous support at 1.3518 and price should stay above 1.3355-60 (100% projection of 1.6106-1.4181 measuring from 1.5282).

Recommendation: Buy at 1.4100 for 1.4300 with stop below 1.4000.

On the bigger picture, our long-term count on the monthly chart is that a big sideways consolidation from 2000 low of 1.2557 has possibly ended at 1.7509 as circle wave B with [A]: 1.6976 ( (A): 1.4513, (B): 1.2612, (C): 1.6976), wave [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. The selloff from there is now unfolding which itself should be labeled as an impulsive wave with wave 1: 1.5186 (diagonal wave 1), followed by wave 2: 1.6096 and wave 3: 1.2451, wave 4: 1.4380, wave 5 as well as larger degree circle wave C has possibly ended at 1.2129 and major correction has possibly commenced for retracement of recent decline towards 1.4000, then 1.4180-90 (38.2% Fibonacci retracement of 1.7509-1.2129). Below said support at 1.2129 would risk weakness to psychological support at 1.2000 and then 1.1851 (50% projection of 1.7509-1.2451 measuring from 1.4380) but reckon 1.1500 would remain intact, bring reversal later.


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