Elliott Wave Analysis of USD/CAD

USD/CAD - 3rd Wave Extending?

I’ve been torn how to count this pair since we made a new high this week. Until this new high was made I was counting the August 4th high as the top of wave ((iii)) and was looking for either a wave ((iv)) that either consolidated through time or price that was well proportioned with the wave ((ii)) that bottomed on June 18th. While we did a fairly good job calling the action from the August 4th high into the August 12th low the move up off of that low has been quite difficult to track and has thus had us sidelined from a trading perspective since that time. So after spending some time reviewing this pair I am modifying my base case in such a way that suggests that this entire move off of the August 12th low is actually part of wave (v) of an extended wave ((iii)) and not part of the final wave ((v)) as I had been tracking until this point. I will however still keep the topping case as the alternate case which suggests that this move off of the August 12th low is the final move of this impulsive move off of the May low.

Base Case:
There is no question that the move off of the August 12th low has been extremely messy and overlapping. This is the primary reason that I had been willing to count it as an expanded b wave through the early part of this week. While this is still a valid possibly due to the continued extensions higher an expanded b wave is less likely at this point which leaves us looking at this corrective move higher as an Ending Diagonal to complete wave (v). We still do not have enough waves to call this ED complete and are still looking for another wave iv and v before we can call this ED complete. Minor support for this wave iv of the ED is in the 1.3144 area and invalidation of the ED would come in with a break of 1.2952. Targets for wave v of (v) of the ED come in at 1.3414 - 1.3565. If this ED does fill out as shown on then we can expect a sharp reversal back down towards the 1.2861 level as this is where the ED began. Once we top for wave ((iii)) larger support for wave ((iv)) comes in at 1.3016 - 1.2770 with invalidation of wave ((iv)) coming in with a break of 1.2563

Alternate Case:
The alternate case is that the August 12th low was the bottom of wave ((iv)) and that we are currently in wave ((v)) of 5 of (C). Under this case the next high would count as a more significant top. This case is shown on both the chart labeled 'alt' and in purple on the Daily chart. Even under this case we still likely need another wave iv and v to complete the pattern so from a trading perspective there is not much difference in the short term between the two counts and we will be looking for an intermediate short setup in the coming weeks after we complete the pattern to the upside

Thanks for sharing, interesting.

Looks like we have topped in wave iii and are now in wave iv down. Ideal support for wave ((C)) of iv comes in at the 1.3168 level. From there would like to see one more push higher to finish off wave v of (v) of ((iii)) into the 1.3414 area to complete this Ending Diagonal. Assuming that this does fill out as expected then after the ED completes we would expect a fairly sharp retrace for wave ((iv)) down towards the 1.2861 level as this is where the Ending Diagonal began (An Ending Diagonal will typically retrace it's entire move rather quickly once complete).

Today we held over the ideal support level for the wave iv of the potential ED. The move off of that low so far is looking corrective higher, which is what we would expect in an Ending Diagonal scenario as all of the waves in an ED are corrective in nature.

From here Ideally we hold over today's low at 1.3117 and make another high over the 1.3353 level to complete this Ending Diagonal up. Again after this ED completes we would then expect a strong move in to the downside towards the 1.2861 level.

With this push up this morning we are very close to approaching the topping zone for this Ending Diagonal for wave v of (v) of ((iii)). I am looking for a full 5 wave move off of the 1.3199 level to indicate that we have complete wave ((C)) of v of (v) up. Targets for this final push up are in the 1.3360-1.3459 zone.

This mornings move down just barely held on for a deep retrace for a potential bottom of wave (C) of ((B)) down. The larger degree wave structure still needs one more high over the 1.3353 level to have enough waves in place to call the large Ending Diagonal complete. If we do not make a new high back over the 1.3353 level before breaking down then we cannot rule out a possible truncated wave v of the ED however should this occur it will make for a very unreliable pattern. For now we are watching to see if we can manage to squeeze out more more push higher to complete the pattern before topping.

This move off of the 1.3136 low is not looking impulsive to complete wave ((c)) of v which suggests that we may be in an Ending Diagonal within an Ending Diagonal to finish off wave ((c)) of v up. Again any move over the 1.3353 gives us enough waves to complete this larger Ending Diagonal pattern after which it is likely that we see a strong reversal lower. Bottom line this one is getting very close so keep a close eye on it...

This pattern is becoming more and more complex as this pair attempts push into the final high to complete the large Ending Diagonal. Last night we were just about 30 pips away from making a new high which would have given us enough waves to call this large ED off of the 1.2861 level complete. This morning we fell off of last nights high and stopped just over the lower channel support level of the ED in what is potentially the (C) wave of a larger wave ((B)) triangle of this final v of (v) of ((iii)) up. As long as we hold over the 1.3136 support level then I am still looking for this to resolve higher to finish of the final wave v of the ED up. A break of this level would be the first indication that we are dealing with a much more complex pattern and potentially have already topped for the larger degree wave ((iii)) and have already begun wave ((iv)).

This morning after the BOC rate decision announcement we saw a spike down that almost invalidated our triangle count. We did however hold just over the level that we needed to keep the count valid and have since then made a strong move back up into an afternoon high of 1.3250. As long as we hold over this morning's low then I am still tracking the triangle count as my primary count which suggests that we see higher levels into the 1.3295 level to complete the (D) wave of this triangle before retracing back lower one more time to finish off the wave (E) of the triangle. Now because we are in a very messy corrective structure I am not going to get to cute with this and if at any point we see a move over the 1.3353 level then we will have enough waves for our larger degree ED to be complete at which time a strong reversal to the downside could occur at any time.

Overnight we dropped down off of what I am counting as the top of the wave (D) and we now have enough waves in place to call the triangle complete as shown by the yellow (E). With that being said we may still need OML to complete the triangle (shown in white) before we are done. Again I am not going to get too cute with this however and will consider any move over the 1.3353 level as having enough waves to call this larger ED complete.

This pair is a tough one. I suspect it will make one more move higher, breaking the current resistances and then the CAD making a comeback then.

Thanks for sharing. i will keep in touch. maybe you can give us idea where to put pending order.

USD/CAD - Since my last post here we did in fact see a move lower for what was potentially the bottom of wave (E) of this triangle and which produced a very strong move higher off of this low. (We actually caught this move in real time in our trading room for a quick short term trade higher). We have since seen this move up morph into a wave structure with a lot of overlap, too much overlap to consider it impulsive at this point in time. This leaves us with two possibilities the first of which is that this move up is part of an Ending Diagonal for wave ((c)) of v out of the triangle and the second of which is that the triangle is not quite done yet.

Under the Ending Diagonal case we should hold over the 1.3215 level and continue up over the 1.3353 level to complete our larger Ending Diagonal that we have been tracking. If we do move up directly from here I would expect the move to be somewhat muted perhaps just barely making a new high over the 1.3353 level before topping.
Alternatively if we do move back lower under the yellow count then we may see a much strong move higher before we retrace for our wave ((iv)) down into the 1.2861 area. Now if we do in fact move lower under the yellow count towards the 1.3200 area it would actually set up a fairly decent short term trade to the long side with stops under the 1.3154 level and targets over the 1.3353 level. As I have mentioned earlier once we see a move over the 1.3353 level I am very cautious on longs as once this ED completes we should see a very strong reversal back towards the 1.2861 area.

As far as entry levels for the short trade until we see what the wave structure looks like over the 1.3353 level it is still too early to lay out entry and stop levels for the potential short trade setup. What we are looking for is a 5 wave ((C)) wave off of the bottom of the ((B)) wave that exceeds the 1.3353 level. We can then use our Fibonacci extensions to help us project targets for the top of this ((C)) wave to help determine a topping zone and then setup some entries and stop levels from those points. Until we see that however we simply have to be patient and wait.

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Sorry, I am getting an error message when I attempt to upload chat images to this site. I have posted the full write-up along with charts at our site at the link below:

https://www.elliottwavetrader.net/forex/analysis/USD-CAD-Still-no-confirmation-of-breakout-20150914820.html

@marketshark382 - Yes that is exactly what I am expecting as well. OMH and then move back down towards the 1.2861 area. That being said After we retrace off of the next high I do expect that we will see another run higher into the high 1.3s before we see significant top in this pair. The initial post in this thread is actually still valid and goes over some of the more intermediate expectations on this pair.

@shamsol5713 - For the short trade still a bit too early to really determine high probability setup until we see what the structure looks like over the 1.3353 level. That being said if we do move back down towards the 1.3200 area we may have a fairly decent short term setup to the long side with well defined entry, exit and stop levels that provide us with a good R:R.

Well we certainly are not following though to the upside out of this triangle just yet which has increased the probabilities that we are following the alt yellow count of this triangle. This puts us back to where we started last week with our short term long trade that we initiated at the 1.3190 level. If you are not in the trade then you will have the opportunity to enter the trade with move down towards the 1.3200 level with stops under the 1.3154 level. Upside targets for this short term trade to the upside come in at the 1.3353 - 1.3550 zone.

I am still getting an error message when I attempt to upload images to this site. So posting link to chart again here:
https://www.elliottwavetrader.net/forex/analysis/USD-CAD-Still-waiting-on-a-breakout-20150916825.html

USD/CAD – 3rd Wave topped?

For the past several weeks my base case on this pair had been that we were in a large Ending Diagonal looking and I was looking for one more high to complete this Diagonal before heading lower to complete wave ((iv)) of 5 of (C). The level that we needed to hold for this immediate upside count to remain valid was the 1.3136 level. On September 16th I posted an alternate count in our trading room that discussed the alternative count should this level break to the downside along with the support levels that I was looking for should that level break. Well on September 17th we did in fact break the triangle count to the downside which was suggestive that we have topped in wave ((iii)) thus putting us in wave ((iv)) and now looking for just one more high before we can call a more significant top to this pair.

Now as we can see on our charts we have already hit the top of the target box that we had been watching for quite some time for wave ((iv)). This support level was also just under the long term channel support that was formed in June of this year. The hit of this upper support was followed by a very strong reversal to the upside thus certainly leaving us with the possibility that the low that we saw on September 18th was the bottom of wave ((iv)) as shown in yellow on the chart. With that being said we are still under the key resistance levels that we would expect to see under a b wave scenario and until these levels are breached we cannot rule out another trip deeper into the wave ((iv)) support zone before we see another high.

So from here the first resistance level that we are watching is the 1.3274 level which is the 76.4 retrace off of the August 25th high. If this is in fact a retrace of wave (b) of ((iv)) we should ideally hold under this level. A break of this level increases the odds that we have in fact bottomed for wave ((iv)) and are on our way to new highs for wave ((v)) of 5 of (C). Alternatively should we see a rejection off of these key resistance levels followed by an impulsive move to the downside we will be looking to first retest the 1.3000 level with possible extensions down into the 1.2799 level for a bottom of wave ((iv)) before heading higher to complete our final fifth wave up. Targets for this final fifth wave higher come in at the 1.3414 – 1.3729 zone.

See Charts Here:
https://www.elliottwavetrader.net/forex/analysis/USD-CAD-rd-Wave-topped-20150921830.html

USD/CAD Setting Up For Run to New Highs?

The longer term trend on the USD/CAD has clearly been up since the 2011 low. We have however seen quite a bit of volatility in the pair since the September 28th high. In fact if we count the movement of 3 major swings from the September 28th high to the November 6th high we have seen over 1500 pips movement in this pair off of these three major swing points. The question that lies ahead is will we continue to see large bi-directional swings or are we ready to see a sustained move higher following our larger degree trend. To help answer this question I am going to talk a little bit about using Fibonacci Pinball in conjunction with Standard Elliott Wave Analysis.

If we start by looking at the daily chart on the USD/CAD we can see that so far we have a fairly clean 3 wave move up off of the May 13th low into the September 28th high. Notice that the September 28th high came just shy of the 200 Fibonacci extension from the initial wave up off of the May 13th low. The September 28th high was then followed by deep retrace that bottomed just above the 100 extension of our initial move of off the May 13th low. Both of these Fibonacci levels are standard targets that we expect to see hit under the Fibonacci Pinball guidelines.

If we drill down to the four hour chart we will notice that the initial move up off of the 10/15 low was indeed a five wave move. Now with that being said this five wave move did not come in form of a standard non-overlapping impulse but rather in the form of an overlapping leading diagonal. This wave structure in and of itself is not a highly reliable pattern in which we would want to trade against. The more conservative approach is to wait for further confirmation of a trend before entering a trade when we are faced with a potential leading diagonal.

Making the assumption for our charting purposes that we did in fact have a leading diagonal for this initial move up off of the October 15th low we would then label move as wave (i) of ((v)). We would next be looking for a corrective retrace for wave (ii) into the 38.2 – 61.8 retracement level. In this case we saw a retrace that bottomed on November 2nd that ended just over the 50% retracement level of the initial move up off of the October 15th low. This is well within the expected range for a second wave within Elliott Wave.

Next we are looking for is a strong impulsive move off of this low to give us further confirmation that we have indeed begun our third wave up. Once again in this case this is exactly what we saw with a very strong rally into the most recent high that topped on November 6th at the 1.3316 level. This 1.3316 level just so happens to have been almost exactly 61.8% as long as the first move up off of the October 15th low which is providing us with further validation that we are seeing follow-through on our impulsive path that should ultimately take us higher.

So from here what the ideal scenario takes us into the 1.3215 – 1.3143 level as a retrace for wave ii of (iii) which we would then expect to be followed by a very strong move higher for wave iii of (iii). Again using our Fibonacci Pinball guidelines we can set some initial targets for the projected path of this move. Our first initial target for wave iii of (iii) comes in at the 1.3601 – 1.3666 range with target for wave v of (iii) coming in at the 1.3781 – 1.3850 range. After these levels are hit we would then expect to see a deeper retrace before finally completing our last push higher into the 1.391 – 1.4198 level for wave (v) of ((v)).
Now because this is following our Fibonacci Pinball guidelines very well thus far we have a fairly high confidence level in this particular trade setup with a very good risk to reward ratio. Of course even the very best setups are not infallible and thus we need to know at which level this particular setup breaks down and invalidates. In this case the invalidation level occurs with a break of the 1.3036 level as it is against the rules of Elliott Wave for a second wave to terminate beyond the originating point of wave one.

I encourage you to also read Avi Gilburt’s Basics of Fibonacci Pinball here after you read this real world and real time example of trading the USD/CAD using Fibonacci Pinball.

The Basics of Fibonacci Pinball:
https://www.elliottwavetrader.net/elliottwavetheory/memberlibrary/The-Basics-of-Fibonacci-Pinball-20130129224.html

USD/CAD Charts Also Available Here:
https://www.elliottwavetrader.net/forex/analysis/Charts-on-USDCAD-20151111929.html

Thanks for sharing.

The USD/CAD keeps its bullish trend, the next resistance may be the 1.3458 level and from there the price may try to stall or even break to the downside, but if oil keeps dropping, then we may see a breakout of that level, but there are no important supports until the 1.2840 area.