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In February's article about supposed movement of CAD the area of the trend downward reverse was projected and the first target at ~1.1450 was specified (see Several Words about CAD). Having reversed downwards exactly at the projected point (1.1874), USDCAD reached the projected target on April 11.
Then the price might keep falling in the impulsive mode or start forming of the final waves of the upward extended correction. The price might have chosen the first variant, as it kept falling (Figure 1, below).
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Figure 1. Wave counting on the daily chart. The main variant.
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According to the presented main variant the third wave 3 of the supposed impulse (5) is almost completed. If the supposition is correct wave 4 of (5) will start forming in the nearest future. It may assume the shape of the (double) zigzag and complete around ~1.1450. The next minimum target for the downward wave 5 of (5) is 1.09, which will allow it to form a full impulse or a diagonal triangle.
These suppositions are based on the analysis of the wave picture and wave 3 of (5) structure, see pictures 2 and 3 below.
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Figure 2. Wave counting on the 240 min chart.
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It is obvious that wave 3 is forming with the extension in the fifth wave [v] of 3. The full set of its inner waves allows us to suppose its nearest completion, MACD suggests the correct numeration of the inner waves and confirms their ending. Expected double retracement of Elliott provides us with the guides for the extremum of wave 4 of (5) at 1.1485. Moreover, extension in the fifth wave is more frequent in the third wave of the impulse, which confirms this scenario indirectly.
If the suppositions are confirmed, the survey wave counting may look as presented in Figure 3.
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Figure 3. Wave counting on the monthly chart.
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Supposed impulse [A] will complete with wave (5) ahead of the global correction [B].
Though this supposition is only a possible variant of wave counting and further price movement. According to the nearest alternate scenario global impulse [A] may have already completed at the last day of May 2006, currently global correction [B] may be forming (see Figure 4 below).
According to the less probable alternate variant wave (4) of [A] may keep forming (see Figure 5 below).
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Figure 4. Wave counting on the daily chart. The alternate variant.
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According to the most probable alternate scenario currently the second corrective wave (B) of the global correction [B] is forming. This wave may assume the shape of the downward double zigzag. By the way, this variant does not contradict Elliott's expected double retracement, as opposed to the next variant.
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Figure 5. Wave counting on the daily chart. The second alternate variant.
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Less probable but theoretically possible scenario supposes that wave (4) may keep forming in the shape of the upward double (triple) zigzag.
We will learn soon which scenario the price will choose.
Addition (April 26, 2007)
One of possible variants of wave counting of the final diagonal triangle (v) of [v] of 3 of USD/CAD is given in Figure 6 below.
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Figure 6. Wave counting on the 60 min chart.
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If the supposition is correct by the end of the week the supposed diagonal triangle (v) may complete, remaining within the 12th figure (the area of possible projected points is specified by the yellow-red ellipse). As a rule, in the downward expanding diagonal triangles the ending of the final wave does not reach the lower generating line of the pattern.
Note
Given possible trading plans are purely informational purpose only and they should not be considered as trading guides or an invitation to make a transaction.
Reference:
Dmitry Voznuy
forDmitry@yahoo.com
April 24, 2007
Do not reproduce without explicit permission of Alpari.
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