CADCHF Weekly Overlook - The bigger picture

After latest BoC statement I find this pair to be very interesting. After a 3 waves rise and a pullback into structure (overlapping wave) it now looks like the pair is likely to make a larger 5 waves rise on a journey from the Weekly- to the Monthly Tunnel (approx. at 0.8160). The Wavy Tunnel together with the AO indicator are fundamental in my Elliott Wave analysis as price tends to travel from tunnel to tunnel of various time frames. The main obstacle is it to overtake the 0.75272 high to follow up the latest Higher Low with a Higher High.

As you can see on the chart, I look at this whole move from the bottom as a correction even though we are talking about a 1500 pips move (if reaching target). This is due to the overlap between wave a (at 0.72027) and wave (b) (at 0.70898). This tells me that it's not a 5 waves move from the bottom, but a 3 waves one. As I expect the move from 0.70989 will be in 5 waves I have labeled it as (a)-(b)-(c) but it's quite possible it will turn out as a so called "complex" (w)-(x)-(y) wave, which at this stage simply is impossible to tell. So I have marked up this possibility as my Alt count in one single color.

To conclude if blue wave 4 has completed and we have begun blue wave 5, we have to go to a lower time frame. So at this point in time we wont get any further on this chart.

Comment:

On Daily we can see that wave 2 was made as an expanded flat and we have tested and left the tunnel behind us and wave 3 went through weekly tunnel and made wave 4 as a back test in to it before taking off. The AO indicator tells us this is an impulse and this is also indicated by the structure (price overtook at least one internal and one external peak). Not shown on the chart, this could also be confirmed by drawing a channel based on (b) and 2, resting on 1, and we would see that price not only penetrated but also closed outside of the channel several times before correcting. Conclusion: This is a wave 3 no doubt.

So if wave 4 has bottomed here, which looks probable, then I expect price to reach at least 0.76 and now we just need to find an entry.

Comment:

Not much changed really the past week in terms of structure, looking at the weekly chart. However, I have concluded that the wave from bottom up more likely to be a WXY combination rather than an ABC. It's possible we will see price retreat a bit further before turning up again, which I'm still confident it will.

Comment:

Here is another, slightly different count, based on a monthly chart offering some more price data. We can see on the AO indicator that selling pressure is easing, although we cannot really see any real buying pressure just yet. Still to come in my view. Possible price has to come down further fist before that happens though. The question is with how much? In any case, so far we have only corrected the move from Nov-07 high to Dec-14 low with a nudge more than 23.6% and I expect it to correct at least 38.2, at least.

Comment:

The Covid-19 Omicron (B.1.1.529) variant threw a wrench in to the works of market at the end of last week and it's still too early to say what kind of damage it has caused to the longer term picture. From the information that has come through over the weekend it appears as if we have had a risk-off overreaction, once again. The move in the Euro across the markets was very suspicious in my view and I expect much of it, if not all and potentially more, will be retracted. Maybe the coming week already.

In any way, I like to see more data as the week takes off before I make updates to my charts, but cautiously I think this can be a buying opportunity. In fact, if Omicron competes out Delta and proves to present much milder symptoms, resulting in less hospitalizations and decreasing death figures then we may be in for an even stronger risk-on move going forward. However, it's early days yet so let's wait for the data.