CADJPY has been correcting downside after completing a triangle pattern as part of a larger degree double zigzag correction. Is the bearish correction over?. Will price resume upside? What corrective pattern has completed. These are answered based on 28 March CADJPY Elliott wave trade setup.
28 February, AtoZForex – On 17 February, we shared a bearish setup on CADJPY. It was one classic setup that every trader would like to take. This is because of the potential risk/reward ratio. Price had just completed a classic triangle wave X of a very likely double zigzag pattern. The intention was to get in and ride as price was expected to complete wave Y downside. The risk/reward that comes with this kind of setup is usually more than 1:3 especially if it is plucked at a good price. The alert was early, classic and profitable. Who wouldn’t like to take such?
The charts below were used as we looked at a long term bullish bias with a medium term bearish bias. From the weekly to the hourly, we spotted a triangle pattern that would drive price downside.
Price will continue downside to complete the double zigzag pattern. This is a classic setup that can give 1:4 or more in R/R. The setup is invalid above 87.77 and found on the H4 chart.
Price went down very fast covering about 500 pips, more than 1:4 R/R. This is a classic example of how the Elliott wave theory helps to model price actions from a very long term to the nearest term and forecast into the future. It is because of a setup like this that makes us stay close to the wave theory. Even after this move, we are not left in the dark. We were expecting the dip to complete a double zigzag pattern. Has that happened? The chart below gives a clue.
28 March CADJPY Elliott wave trade setup: imminent rally?
Seems the double zigzag has completed as shown above. The wave Y is a double zigzag of its own. A strong rally above 83.67 should be enough to confirm the bullish continuation. The chart below shows it more clearly.
This could be another opportunity to swing traders and long term traders to take a new journey upside for another couple of months and for another big R/R.
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