In the May 13th email on $/cad and the market bouncing from a retest of the Nov low at 1.1470/80, said that the downside pattern was not “complete”, and with a resumption of the longer term declines to new lows favored after. Unfortunately, did not reach the sell target at 1.1865 (reached 1.1815), before reversing sharply lower and taking out those 1.1470/80 lows (Nov/May 11th). Currently, the market is quickly nearing important, longer term support at 1.1050/00 (both the bullish trendline and a 50% retracement from the Nov 2007 low at .9060, see longer term below). Note too that the market is oversold after the last few months of declines, and is likely within the final downleg in the fall from the April high at 1.2715 (wave 5, see numbering on daily chart below). This in turn suggests that risk is rising for at least a few weeks of correcting and minimum 600-700 tick bounce, and with the key 1.1050/00 support area a “logical” area to form such a bottom. However from a position standpoint, there are still no signs “pattern-wise” that such a bottom is in place while the downside momentum remains strong, so still too risky to just buy here. Instead for now, would just be patient for a better risk/reward entry ahead (expected to be on the long side).
Longer term as mentioned above, the market is nearing important support and is a “logical” area to form a potentially important bottom. However, the magnitude of such a bottom (if one does indeed occur) remains in question (could see just a few weeks of gains, or could see another upleg all the way back to the March high at 1.3060 and even above). At this point, the longer term outlook is somewhat mixed but suspect that it will become clearer based on the form/shape of this nearer term bottom (once it occurs). So for now, would have a neutral longer term bias.
