In the July 9th email on $/cad, said to short (then at 1.1625) as the numerous negatives suggested that the market was topping. The market did indeed tumble soon after, accelerating below key support at both the multi-week rising wedge and the bullish trendline since June (see daily chart below), and is currently trying to consolidate from its recent low at 1.1120. With no signs “pattern-wise” of a bottom (at least so far), further declines are favored. However, the market is near term oversold after the last week’s plunge, bigger picture support is just below at the bullish trendline since Nov 2007 (currently at 1.0910/25), and a longer term bottom may be place (see below). This in turn suggests that further new lows (if they do indeed occur), may be limited. So for now, would get very aggressive with stops, covering shorts on a close above the 1.1250/65 area. Also, if the market does indeed push to new lows, would lower stops even further to a close above the 1.1120/35 area (recent lows).
Longer term no change, as the market is seen as potentially completing a large, irregular correction at the Jun 1st low at 1.0790 (A-B-C, see numbering on weekly chart/2nd below). Though this scenario suggests eventual gains all the way back to the Nov/Dec/ March triple top at 1.3000, the upside is not likely to be a sharp move higher, but more likely an extended period of wide, upward ranging. In the July 9th email, had suggested waiting for a pullback as the market was seen as topping on a near term basis, which has indeed occurred. Though there are still no signs of a shorter term bottom (see above), the bigger picture downside appears to be limited. So for now, would switch the longer term bias to the bullish side here (currently at 1.1165).
