Currency Market - Canadian Dollar Highlight #1
20 year low identified to the very day in the Canadian Dollar as the first weekly "Inversion Cycle" since the previous summer ALIGNS WITH Elliott Wave pattern - sharp 2 month rally follows.
(COMMENT # 50)
UPDATED 19980129
COMMENT 1998-50
1. If there's been a market I've been cold on, it's been the Canadian Dollar.
2. Note that this market is making an all-time low as a weekly "Inversion Cycle Index" occurs this week. This is the first such "Inversion Cycle Index" since last summer.
3. It is, of course, interesting that the Canadian Dollar tanked after having announced its announcement of major gold sales. Perhaps gold is not as irrelevant as the pablum we've been fed by the media over the last few years has suggested.
4. From the 971003 high, the market appears to have unfolded in 5 Elliott Waves down.
5. The first wave required 17 trading days, 25 calendar days, and declined 262 ticks (100 X SQ PHI).
6. The second wave required 36 trading days (FIB # = 34), 54 calendar days (FIB # = 55), and declined 240 ticks (FIB # = 233).
7. The third wave required 13 trading days (FIB #), 20 calendar days (FIB # = 21), and declined 237 ticks (FIB # = 233).
8. Traders should be particularly sensitive to market reversals to the upside in this market and should employ approaches that provide long entry with tight stops against recent lows in the April contract.
9. The very short term trading system presented on pages 96-101 of "The $upertrader's Almanac - Reference Manual" is such a "system" and can be used on either daily or intra-day charts.
10. A close above the open over the next few days will cause a "black" candlestick which should be sufficient to provide a short term entry signal.
11. The system presented in pages 205-209 of "The $upertrader's Almanac - Reference Manual" is particularly suitable for this market at this time as is the "ALMANAC II" trading system presented in "The 1996 $upertrader's Almanac - 2nd Half Edition). Note that the same pattern applies to the hourly chart which reduces risk and provides for tighter stops.
12. The reader should observe that trading is simply the process of identifying a number of situations such as this one that have a chance of working out quite well if the analysis is correct but which involve very little risk to capital if wrong.
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