This is an update on AUDCAD video that we did last week in which we were expecting the pair to end a cycle from 3/7/2016 and 12/31/2015 peaks i.e. wave (W) and start to develop a bounce in wave (X) to correct the decline from 12/31/2015. Last week, we saw the pair bouncing and now the distribution system and break of RSI trend line are confirming the idea that wave (W) ended at 0.9326 and a bounce in wave (X) is now in progress. Area between 0.9636 – 0.9687 should end 3 waves from the low and could be all of wave (X) but as the bounce so far is too short in time, a double correction in wave (X) can’t be ruled out which could take the pair as high as 0.9747 – 0.9847 area before it turns lower again. As the daily sequence is bearish, our preferred strategy would be to look for selling opportunities in 3, 7 or 11 swings as far as pivot at 12/31/2015 high remains intact.
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