USD/CAD Top down analysis

Visible bellow are my weekly chart counts on the USD/CAD both are bullish due to the 5 wave advance seen beginning on AUG of last year.

As seems evident on the chart above, we have a complete double zigzag correction to the downside, I say complete due to the 5 wave rally seen on the USD accross the board in 2011, followed by what seems to be a 'clearly' corrective set back, One of the low probability bearish alternates would be that we are forming a triangle X wave (wave (1) being a corrective wave A and (2) wave B) and we'll eventually break out and decline in a wave Z zigzag, Looking at all the markets across the board there seems to be very little reason to even hold such a count as an alternate. Lets take a look at shorter counts on this currency pair.

As visible above I am counting the advance from aug 2011 as an impulse with an extended first wave. Extended first waves are only expected to form 5 % of the time in impule waves however the odds of a first wave extention increases if the wave being analyzed in itself is a first wave due to the guideline that states that the extention in an impulse is usually the same number as its parent wave. Notice that we formed a triangle wave B (nicely confirmed by the oscillator) which signals that the move that followed (wave C) is the last move of the triangle's degree and the upcoming bounce will be at least of the same degree as the entire decline from the wave (1) peak. Also notice that we made it right into the second wave zone of smaller degree. Which is what you'd expect after a first wave extention and especially if the decline post the impulse that sported an extended first is a second wave which it is. Also notice that we declined right into the 61.8% fib of the 1st wave advance which is also a typicall target for second waves.

This hourly chart supports the idea that we are still in the second wave post the diagonal triangle that occured after this pair put in its wave (2) low as visible on the charts above. This count suggests a decline bellow 0.99 before exploding higher, Alternate count on this hourly is that the wave ii post the diagonal is complete. no shorts would be advised as the declines will prove corrective relative to the diagonal post the wave (2) low hence longs would be savvier if prices break 0.99 with a stop bellow the diagonal low.

Regards,
Ahmed Farghaly.