What Does Elliott Wave Say for EUR/CAD?

10/23/2009 12:01 am EST

Focus: FOREX

EUR/CAD: Wave A from 1.7509 has possibly ended at 1.5186

Although the single currency dropped to 1.5231 last week, euro found good buying interest above the recent low at 1.5186 and staged a strong rebound from there, retaining our count that a low has possibly been formed at 1.5186 and consolidation with upside bias remains for gain to 1.5900 and possibly towards 1.6096.

Our preferred count that larger degree wave [C] from 1.3289 has ended at 1.7509 in Dec 2008 with (A): 1.6325, (B): 1.4719, followed by wave (C) at 1.7509, hence wave [D] (also a three-legged move) has taken place from there and (A) leg is possibly unfolding as a diagonal triangle with a: 1.7509-1.5642, b: 1.6973, c: 1.5346, d: 1.6329, and e leg has possibly ended at 1.5186.

A rise above resistance at 1.6096 would bring test of pivotal resistance at 1.6329 and looking ahead, break there would confirm the entire wave (A) from 1.7509 has ended and then the (B) leg of would bring stronger rebound to 1.6500 and then towards 1.6622 (61.8% Fibonacci retracement of the entire wave (A) from 1.7509-1.5186).

On the downside, below 1.5600 would risk fall to 1.5500 and possibly towards 1.5390/00. However, only break of support at 1.5186 would extend the decline from 1.7509 marginally to 1.5000, but this final leg of the larger degree (A) wave should be limited to 1.4825chart support and bring wave (B) rebound in late Q4.

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On the bigger picture, our long-term count on the monthly chart is that a big sideways triangle consolidation is taking place from 2000 low of 1.2557 and is labeled as follows: [A]: 1.6976 with (A): 1.4513, (B): 1.2612, (C): 1.6976, [B]: 1.3289 is a double three with 1st a-b-c: 1.5384, x: 1.6709, and 2nd a-b-c: 1.3289.

As indicated above, the wave [C] has ended at 1.7509 and [D] leg is underway with (A) leg of [D] possibly ended at 1.5186 or may extend to 1.4901 (61.8% Fibonacci retracement of wave [C]), but support at 1.4719 should hold.

In the event euro rises above 1.6973, resistance would suggest the [C] leg is still unfolding and retest of 1.7509 cannot be ruled out, but break there is needed to extend rise to 1.8000.

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By the Staff at ActionForex.com

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