AUDCAD impulse wave set up just completed around 0.9730. We look at the technical conditions required for price to correct to 1.0 psychology level. Will price dip after the rally or make a new high? If price doesn’t rally, we look at other support levels to consider.
20 December, AtoZForex – Since 2012, the price movement of AUDCAD has been dominantly sideways. With smaller zigzag patterns building up to form larger and more complex ones. This further proves that patterns are subsumed in larger patterns of the same structure according to Ralph Elliott. These patterns are called WAVES and they determine the next price direction of the instrument in view. Presently there is an AUDCAD impulse wave set up completing at an important price level.
The chart above shows the price movement and direction of the AUDCAD since 2012. The direction is clearly sideways which could still continue as projected. These are series of simple Zigzag pattern building up to complex corrections. The recent dip is expected to be a motive wave A with a corrective rally B and another motive wave C. This is at least one of the most probable possibilities. The A wave is an impulse wave as shown in the chart below.
AUDCAD impulse wave set up?
The chart above shows a complete impulse wave A completed at an important price level – 0.9730. The expectation is this: price will rally to correct to 1.0 or higher before the larger degree bearish corrective pattern continues. More interesting to note is the fact that the 5th wave of the impulse wave is an impulse wave of its own.
The chart above shows the minimum condition to consider the expected bullish correction. A break above the trend line connecting sub-wave 2 and 4 of wave 5 of the impulse wave A should be seen. This breakout is expected to be quick. Any sideways move beneath the trendline will be a big threat to this forecast.
A corrective rally to 1.0 is expected, if price move as forecast. The R/R won’t be really great. Is there any real possibility that price would rally, if it does, above 1.0 to take a new high? This can be seen in our alternative view below.
AUDCAD: possibility of a rally above 1.0?
The chart above shows our alternative view to the impulse wave earlier discussed. Price, in a bullish reaction, may go all the way to make a new high. This view is less likely that the first.
In contrast, if the bearish move persists, the next level of reversal to watch out for is 0.955.
Do you have other views in contrast to the ones listed or you want to compliment them further? Let’s know by your comments below.