The rise in the USD/CAD since July 2011 has been wave C of an ABC zigzag-type correction.
The wave B was a triangle that gave rise to the majority of the rally of wave C, up until wave 3. The 5th wave has already developed 5 component waves, and even the 5th extended component wave appears to be complete with 5 subwaves.
RSI divergence between the 3rd and 5th waves reflects that the rally is weakening and may be done soon. Look for an impulsive (5-wave) decline followed by a partial 3-wave retracement as a potential short entry point.
The correction will be retraced more than 100%, as the primary long-term trend in USD/CAD is down.
Comments
ac7777
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The drop from 1.46897 appears to be only corrective. I estimate a thrust down into the 1.32 area for now.
ac7777
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I want to add, as a warning, that there is a chance this could be a bullish triangle -- a final move to thrust higher. It appears possible given the lower highs and higher lows since the initial impulsive thrust down from 1.40018. Consider the possibility and protect your positions as appropriate.
ac7777
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ac7777
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Ultimately, wave ii retraced nearly the full length of wave i, up to 1.39934 but could not exceed it. Since that high, an impulsive wave down has unfolded. This will be the first small wave of wave iii down. Notice above that the third wave of it is shorter than the first wave. This suggests that the fifth wave will not be longer than the third wave, as a third wave cannot be the shortest of waves 1,3 and 5 in an impulsive sequence. It is no coincidence then that the fourth wave triangle is presenting a thrust measurement which implies a distance for the fifth wave to allow it to be shorter than the third. That would limit the fifth wave to about 1.39144. At that point, there should be a corrective rally in three waves to retrace a portion of wave ii. 38.2 to 50% is a typical range of retracement for third waves and their component waves.
SpaghetiBolognese
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I'm with you.
ac7777
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As expected, price has made a sharp upward reversal just shy of the lower limit shown in the chart above.
Now, I suspect price may retrace to around 38.2 to 50% of this wave (i), perhaps between 1.3945 - 1.3955, before turning down in wave (iii) of iii.
ac7777
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ac7777
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After a lengthy wave 'a' and 'b' (which were relabeled today, shifted more to the right) a wave 'c' struck 1.39675, almost touching a 78.6% retracement of the impulsive wave 'i' decline. Wave 'b' did finally end as a triangle which yielded a thrust measurement implying a rise to just that level.
After that, we see what looks like an initial impulsive wave down followed by a 50% correction. The third and fifth waves should extend significantly further down to create a larger degree first wave before being partially retraced in a larger degree second wave, and so on, if the count is correct thus far.
SpaghetiBolognese
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from all analyst just you who have the same thought as i did. it's been making zigzag correction. nice to read yours. bravo!