At the middle of July 2005 when USD/CAD value was equal to
~ 1.21 an attempt to specify project targets of the lowest value for this currency pair was made in the article
CAD again (alternate USD/CAD) (in Russian). Projected targets corresponded to the range between
1.1450-1.1100.
Once current lowest value 1.1298 was reached on March 2, 2006 price rebounded upwards. Some professional wavers suppose this value is the ending of the global downward impulse
[1] or [A].
I doubt this point of view is correct. At first I don't think this local bottom is either impulse ending or the final point of USD/CAD falling. That is why in this article I explain my point of view. Current price value is
~ 1.17.
Refer to Figure 1 for the main variant of the global wave counting.
Figure 1. Wave counting on the monthly chart. The main variant.
This variant exactly corresponds to the wave counting described in the article
CAD again (alternate USD/CAD) (in Russian) last year. Additionally schematic forecast of price probable movement and possible dates of the trend reverse are shown.
First leg
[A] of the global zigzag in the shape of the downward impulse with extremely right proportions and extension in the third wave is supposed to be completed. Wave
[B] of zigzag, which may assume the shape of the extended flat or triangle, is forming.
Let's analyse wave pattern of the global downtrend on a smaller time-frame (refer to Figure 2 below).
Figure 2. Wave counting on the weekly chart. The main variant.
The wave pattern, formed within 8 months from the date the previous article
CAD again (alternate USD/CAD) (in Russian) was released, gives additional material for analysis, projections and targets specification.
At first, one of projected level, expected Robert Miner's 127% external retracement (1.1443), was reached.
Secondly, the structure of supposed wave
(B) assumes that its further downward forming is possible.
Thirdly, forecasted USD decline since April 2006 assumes that at least within half a year USD/CAD drop is more probable than advance (refer to
FOREX forecast, 2006.
The fourth, inner wave structure of the supposed wave
(B) excludes its presentation in the shape of downward impulse.
At last, the fact that the first and fourth sub-waves do not overlap and the outer shape of wave
(B) make the supposition that it may assume the shape of the diagonal triangle less possible.
Taking into consideration the above information we may draw the following conclusion:
- Downward corrective wave (B) of the extended flat or of the expanding (running?) triangle keeps forming.
- Wave (B) is assuming the shape of the double zigzag (a combination of zigzags) with wave X in the shape of the running triple zigzag (refer to New Wave Pattern and New Classification of Extended Corrections in the FOREX Market).
- Further values of Robert Miner's external retracements (162% (1.1089) and 200% (1.0704)) may be treated as price targets of possible ending of wave (B).
- Wave (B) may complete almost simultaneously with completion of USD downward movement (the check time is the end of October 2006, though this decline may last till May 2007, refer to FOREX forecast, 2006).
Let us discuss wave pattern of the expected wave
(B) on the daily chart (Figure 3 below).
Figure 3. Wave counting on the daily chart. The main variant.
One of possible variants of wave counting is shown in Figure 3. Expected wave
W is a
combination of double and triple zigzags. Wave
X is supposed to be assuming the shape of the
running triple zigzag, far from the first one in this part of the chart.
In case the supposition is correct price projections of CAD bottom may be additionally calculated by the length of wave
W and Fibo coefficients. Truly, wave
X is not completed yet and the value of its ending is about
1.1750.
In this case USD/CAD price fall may last to
1.1040-1.0610, that is in keeping with the calculated values through Robert Miner's external retracements. Completion of wave pattern of supposed wave
Y of (B), which has not begun yet, will be determinant for more precise specification of CAD bottom. Critical levels for the current wave counting are shown in the chart.
From the one hand, complicated corrective pattern gives rise to a variety of possible wave counting patterns, from the other hand it indirectly confirms that
cunning wave (B) is forming, not impulse ending.
To specify possible points of wave
X of (B) ending and wave
Y of (B) beginning let's discuss 120M chart (refer to Figure 4 below).
Figure 4. Wave counting on 120M chart.
Two possible variants of further movement are shown in Figure 4. Final wave
[z] of running zigzag
X is supposed to be assuming the shape of a simple zigzag. Its completion is expected around
1.1750.
One of possible alternate variants of the global counting is shown in Figure 5 below.
Figure 5. Wave counting on the monthly chart. Alternate variant.
According to this scenario global downward impulse is not completed yet and its third wave
(3) is assuming the shape of the impulse with extension in its first wave
1 of (3) and correlation of waves
(3) and
(1) equal to Fibo coefficient 4.237.
The supposition that wave
5 of (3) may assume the shape of the diagonal triangle (to say nothing about impulse!) is doubtful. That is why this variant is considered to be alternate.
Addidtion on 03 May, 2006
=
On April 3 CAD formed local height at 1.1770 (wave
X).
On May 3 price reached the lowest target at 1.1040. This value corresponds to 62% of wave
W length and
skewed triangle height (refer to
Skewed Triangles in FX).
Note
This report is subject to change and reveals the analyst opinion of the situation at the moment of its release.
Reference
Dmitry Voznuy
forDmitry@yahoo.com
March 23, 2006
The ideas given above are purely informational purpose only. This report was translated by Natalya.
Do not reproduce without explicit permission of Alpari.
