Tuesday, September 6, 2016

CadJpy: What Now?

On 4th August, we posted a bullish set up for CadJpy where we targeted 80.25 as the immediate medium term target.

The chart below was used.

Price since has rallied to 80.25 and the question now is "what next?".

The preceding dip before this rally could be the long term wave 5 or subwave 1 of 5.

If the recent rally is a price response to the wave 5 which ended above 76.5, then a 5-subwave rally would be expected and we can label the rally outcome as shown below.

A further rally to 80.68 (or a bit higher or lower) could be seen before a dip to somewhere around 79-79.4 price levels where further bullish opportunity could take price to 72 price region. Price should therefore be maintained above 78.8 for the bullish set up to be valid. A break below 78.8 will give rise to the second scenario which is speculated below.

What if the long term wave 5 hasn't ended yet?; then the recent rally would be seen as the second subwave of wave 5. The present rally is now at the 61.8% retracement of the first subwave 1 ( a bearish move).

According to the chart above, the current rally is seen as a zigzag correction and sub-wave (iii) will be an impulse wave (if this scenario is valid). The wave i of (iii) will be expected to break below 78.8 for us to take this scenario serious. If this happens, we can look for a selling opportunity at 50% retracement of wave i.

If price, otherwise, stays above 78.84 after the dip and bounces off the falling trendline; we may have to to look further upside to 82 price level as explained in the first scenario.

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