Forex Technical Update
The USD/CAD rallied sharply after bouncing off 0.9840. The rally is now challenging the bearish outlook, but so far still leaving it intact. The 4H RSi is testing 60 after tagging 30. Only a break above 60 will reflect loss of bearish momentum. Also, the correction is held under 61.8% retracement at 0.9970. A break above parity would shelved the bearish outlook in the short-term. But a break above 1.0050 would be needed to introduce a bullish outlook outside of the short-term, intra-week period.
The wave count labeled in the 4H chart essentially suggests we have completed an impulse wave down. Now this latest 5-wave swing could be also a terminal wave of a wave-3 of a decline that started at the Nov. high seen in the daily chart. That means this current rally could be wave 4, and that is why it should stay below 1.0044, hence a break above 1.0050 will likely invalidate this current count and open up a bullish outlook to follow an already completed (A)(B)(C) correction.
Otherwise wave (C) is still in development and has another wave down to complete it. Then 0.9887 will become an important pivot above which we would show completion of wave (C), but inability to do so to suggest a wave (V) in an alternative count.
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Fan Yang CMT is a trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes and IBTrade will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.