AUD/CAD

-  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 failed to kiss 70, and if it is returning below 40, it should reflect a bearish attempt in the short-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) pattern has already been complete.
- I train 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).
- However, 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 probably 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).

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Fan Yang CMT
Chief Technical Strategist
FXTimes

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.