Trade Idea: USD/CAD - Hold short entered at 1.2690

USD/CAD - 1.2582

Original strategy:

• Sold at 1.2690, Target: 1.2490, Stop: 1.2700

• Position: - Short at 1.2690

• Target:  - 1.2490

• Stop: - 1.2700

New strategy :

• Hold short entered at 1.2690, Target: 1.2490, Stop: 1.2700

• Position: - Short at 1.2690

• Target:  - 1.2490

• Stop:- 1.2700

As the greenback has dropped again after meeting renewed selling interest at 1.2691 on Friday, retaining our bearish view that the decline from 1.2778 top is still in progress for weakness to 1.2540-50, however, a sustained breach below there is needed to signal the wave iv correction from 1.2414 (wave iii trough) has ended at 1.2778, bring further fall to 1.2490-00 but support at 1.2451 should hold on first testing. We are keeping our count that wave v as well as wave (C) ended at 1.3794 and impulsive wave (i ii, i ii) is now unfolding with minor wave iii possibly ended at 1.2414, hence wave iv correction is underway.

In view of this, we are holding on to our short position entered at 1.2690. Above 1.2700 would risk a stronger rebound to 1.2740-50, however, said resistance at 1.2778 should hold. Only break of said resistance at 1.2778 would abort and signal the rebound from 1.2414 is still in progress for retracement of recent decline to 1.2825-30 but still reckon upside would be limited to 1.2880-85 (50% Fibonacci retracement of wave iii) and price should falter well below 1.2990-95 (61.8% Fibonacci retracement), bring retreat later.

To recap, wave B from 1.3066 is unfolding as an a-b-c and is sub-divided as a: 1.2192, b: 1.2716 and wave c is a 5-waver with i: 1.1983, ii: 1.2506, extended wave iii with minor iii at 1.0206, wave iv ended at 1.0781 and wave v as well as wave iii has ended at 0.9931, hence the subsequent choppy trading is the wave iv which is unfolding as (a)-(b)-(c) with (a) leg of iv ended at 1.0854, followed by (b) leg at 1.0108 and (c) leg as well as the wave iv ended at 1.0674. The wave v is sub-divided by minor wave (i): 0.9980, (ii): 1.0374, (iii): 0.9446, (iv): 0.9913 and (v) as well as v has possibly ended at 0.9407, therefore, consolidation with upside bias is seen for major correction, indicated target at 1.3700 and 1.4000 had been met and further gain to 1.4700 would be seen later.

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