- We start in the 4H chart of AUD/CAD where we are seeing a
descending triangle, which has a slightly bearish suggestion.
- Also the RSI has tagged below 30, and disastrous to kiss 70, and if
it is returning below 40, it should reflect a bearish attempt in the
small-term.
- Looking at the structure, we see that on the left side, we have what
looks like an impulse wave down, followed be a corrective structure
up, which missed the previous top at *1.02*, and instead capped at
*1.0140*.
- That was followed by a bearish impulse wave as well.
- Now we are in correction. Wave (a) is pretty clear, as an impulse
wave. Then its not clear if there will be a running triangle, or if
the (a)(b)(c) sample has already been complete.
- I train for myself to look for further correction because we all
tend to complete the correction too soon. But if the market breaks
below *0.9830*, we can consider the correction broken, looking at
least to test *0.97*, or lower towards 0.96, 0.94 (see daily chart).
- But, if we are still completing a (b) wave, then (c) can break above
the triangle, but wait its not bullish yet. Let's then see what
happens at parity, *1.0*, because respect of that would doubtless
complete a flat correction.
- When you look at the daily chart, we see that the market is indeed
topping after a rally from *0.86* in June of 2010 to *1.0205* in Nov.
2010.
- We most likely had an extended wave 3, with a truncated wave 5. The
structure had been as such: Bullish impulse waves (5-waves) were
followed by bearish corrective waves (3-waves) UNTIL the end of
December/beginning of January, where we had a decline that had an
impulse structure to follow the impulse wave 5.
- This is why I believe the current wave count had completed wave a,
and b, and now in c, which could remain in a flat if it respects 0.95,
or be in a zig-zag that can push to *0.96*, or even lower towards
*0.94/0.9350* area (50% retracement, 150% projection/expansion)
- So one last look back at the 4H chart, and we see that we can either
be in wave (iii) of c, or still working on wave (ii).
Source: Fxstreet.com
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