Looking at the CAD/JPY today we can see from the left we had a bearish trend, which finished around 80.522 and the bulls kick in than they drove the price five waves up till end of wave 1, then a 3 wave correction corrected the price to 78.6% retracement of wave 1(80.896), then bulls came back with more power again to drive the price upward till they were exhausted at 85.748 or 261.8% extension of wave A.
Bears corrected the price back 3 waves down, I’m hoping you noticed which correction that wave 4 is if you are new in the website I’ll tell you but you must go through the free course to learn more, the pattern is called flat pattern. Also, you must notice that wave 2 is simple pattern than wave 4, which is the usual case most of the time, I’m not saying that is the rule, it can happen that wave 2 become complex than wave 4 becomes an easy zig-zag pattern. Moving on if you use your Fibonacci tool to predict the support for wave 4 we get than it ends around 38.2% retracement of wave 3 at 83.879. Is that Magic or what? Not really we as Elliot wavers we know around 38.2% wave 4 is supposed to change direction, again this is not the rule it just from experience. Wave 4 can go as low as it can as long as it doesn’t violate the rules. If you don’t know which rule I’m talking about you can go through the course to get it. But they are 3 rules every aspiring Elliot waver need to know by heart.
The last motive wave which is wave 5, kick in and it formed an ending diagonal pattern, that even a bigger confirmation that the trend will change soon. As soon as ending diagonal pattern end at 87.017 the bears kick in and drove the price down to form wave A, Wave A ended at 82.997. From there a zig-zag wave B corrected the price back to 61.8% retracement of wave A at 85.626. I hope you will remember these Fibonacci retracement levels because they tend to repeat themselves in different charts.
Now the moment you been waiting for we are in the wave C, which is very close to being exhausted, looking at the chart the wave C can end anytime in the purple box, as long as the price doesn’t reach the invalidation point. Wave 3 or wave C on bigger time frame will kick in, as you know wave 3 is fast and full of energy. We should capitalize on it and we can make a lot of pips. Happy trading guys and good luck.
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