Elliott Wave Analysis of the EUR/CAD Currency Pair

05/06/2010 12:01 am EST

Focus: FOREX

EUR/CAD: Wave 1 - 1.7509 - 1.5186; Wave 2 - 1.6096; Wave 3 should extend to 1.3000

As the euro has remained under pressure, we are maintaining our latest preferred count that the major rise from 1.2557 (2000 low) has ended at 1.7509 as circle wave B (please refer to larger degree wave count below) and circle wave C are now in progress (already met our first target at 1.3289 – end of previous wave (B) bottom) and weakness to 1.3150 and later towards psychological support at 1.3000 would be seen.

Our latest preferred count is that larger-degree wave (C) from 1.3289 as well as circle wave B ended at 1.7509 in December 2008 with A: 1.6325; B: 1.4719; followed by wave C at 1.7509, hence circle wave C is unfolding with wave 1 ended at 1.5186 (diagonal wave 1), wave 2 at 1.6096, impulsive wave 3 is in progress with wave i at 1.5231, wave ii at 1.6010, and extended wave iii now in progress for weakness to aforesaid downside targets, but reckon major chart support at 1.2557 would hold and price should stay well above 1.2337 (1.618 times projection of wave 1).

On the upside, while recovery to 1.3400 cannot be ruled out, reckon 1.3545/50 would hold and bring such a decline to aforesaid downside targets. Only a daily close above resistance at 1.3735-58 would suggest minor wave iii has possibly ended and bring wave iv retracement to 1.3900 and 1.4000, but renewed selling interest should emerge around 1.4100/10 and bring another decline later in wave v.

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On the bigger picture, our long-term count on the monthly chart is that a big sideways consolidation from the 2000 low of 1.2557 has possibly ended at 1.7509 as circle wave B with [A]: 1.6976  (A): 1.4513, (B): 1.2612, (C): 1.6976), wave [B]: 1.3289 is a double three with first a-b-c: 1.5384, x: 1.6709 and second a-b-c: 1.3289.

As indicated above, the wave [C] has ended at 1.7509. The selloff from there is now unfolding, which itself should be labeled as an impulsive wave with wave 1: 1.5186 (diagonal wave 1), followed by wave 2: 1.6096, and wave 3 is still in progress and may extend weakness to wave [B] bottom at 1.3289 and later towards 1.3000, but reckon major support at 1.2557 would hold.

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By the Staff at ActionForex.com
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