Tuesday December 11, 2007 - 04:06:45 GMT
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Daily Analysis for USDCAD
||Iâ€™ll remain bearish but acknowledge risk of a small consolidation first|
||Losses seen which stalled at the 1.0004 support. However, I feel the move higher is just a correction. Thus before getting too bullish we will need a break back above 1.0080 initially and preferably above the 1.0118 high seen yesterday. If this occurs it will heighten the risk of follow-through to 1.0134 and 1.0164 â€“ care here as this could cause a pullback lower again. Above retests the 1.0214 high.|
||The downside looks encouraging but we still need to be cautious about an earlier break back above 1.0214 which would imply follow-through to 2.0264-94 at least. Next resistance is at 1.0384. (11th December)|
||The recovery from 1.0004 looks corrective and I do suspect we shall see losses. However, we need be wary of a short term sideways consolidation. A break below 1.0054 will assist but we really need a break below 1.0022-31 to see losses extend directly. The 1.0022-31 area could cause further 1.0022-1.0080-90 consolidation. Direct loss of 1.0020 extends the downside through 1.0004 to 0.9988 minimum and probably closer to the 0.9921-58 area.|
||The 0.9921 level is a natural initial target and should cause a correction. However, if this move is seen then there is probably a stronger risk of additional losses but only after that correction. (10th December)|
ELLIOTT WAVE COMMENTS
The drop to 1.0004 appears to be a Wave iii and thus we seem to be in Wave iv. The correction to 1.0118 was a 61.8% correction in Wave iv. This is quite deep but not unknown in this currency pair. It may mean that Wave iv will develop as a triangle and thus we need a break back below the 76.4% retracement around 1.0022-31 to maintain the decline in Wave v.
A direct break lower would imply a 76.4% projection at 0.9958 and we should keep in mind the prior Wave b at 0.9921.
An earlier triangle could allow a slightly deeper move in an eventual Wave v closer to the 0.9921 Wave b low.
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