Trade Idea: USD/CAD – Hold long entered at 1.0210

USD/CAD – 1.0186

Recent wave: Only wave iii of c has ended at 0.9931

Trend: Sideways

Original strategy :

Bought at 1.0210, Target: 1.0340, Stop: 1.0150

New strategy :

Hold long entered at 1.0210, Target: 1.0340, Stop: 1.0150

Despite yesterday's rise to 1.0286, as the greenback has retreated today after faltering below this resistance, suggesting caution on our long position entered at 1.0210 and minor support at 1.0165/70 needs to hold to retain bullishness for another rebound. Above said resistance at 1.0286 would signal the rise from 0.9977 (b leg trough) has resumed and extend further gain to previous resistance at 1.0340, however, reckon the a leg top at 1.0374 would hold on first testing and bring retreat later.

In view of this, we are holding on to our long position entered at 1.0210. A sustained breach below said support at 1.0165/70 would defer our near term bullish view and prolong choppy trading, then weakness to 1.0100/10 would be seen. Having said that, only below support at 1.0076 would shift risk to downside for weakness towards 1.0000/04 but break there is needed to suggest the rebound from 0.9977 has ended and bring another fall towards this level later. Looking ahead, a drop below 0.9977 would confirm downtrend has resumed in wave (iii) for further weakness towards wave iii low at 0.9931 and then 0.9900.

In the event price rises above 1.0340/45, this would revive our previous view that fall from 1.0374 is (b) leg of wave (ii) and then further gain to 1.0285/90 would follow. Having said that, only break of resistance at 1.0340 would add credence to this view and test of (a) leg top at 1.0374 would follow, once this level is penetrated, this would confirm the (c) leg of wave (ii) is under way for stronger retracement to 1.0405/10 (61.8% Fibonacci retracement of 1.0674 to 0.9980).

To recap, early breach of 1.0108 signals the wave iv from 0.9931 has ended at 1.0854 or 1.0674 (with a short (c)), under this count, the wave v has commenced with minor wave (i) ended at 0.9980 and wave (ii) has possibly ended at 1.0374 and below 0.9980 would confirm wave (iii) is under way for retest of 0.9931, then towards 0.9850.