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Currencies CAD Top Trade Idea For October 22nd, 2013 – EUR/CAD

Looking at the daily chart and we wave only bullish signals all over the place. The contracting triangle that appears there is a classical continuation pattern and such a triangle appears either as a fourth wave type or a B wave type in terms of Elliott Wave theory. Clearly not a fourth wave type here as the principle of alternation would not be respected (time taken for the triangle to form is too long when compared with the previous correction), so the only option that we have is to look at it as a B wave type.

Because of that, we are looking at a C wave of the same degree to come to the upside, in a five waves structure and it can be either an impulsive move or an ending diagonal.

Both patterns need to have at least one wave to be extended, with the mentioning that for the ending diagonal most likely the first wave should extend ( >161.8% when compared with the next longest wave). It doesn’t seem to be the case here so the only viable option is to look for an impulsive move.

The double three running correction that follows the breaking or the triangle is all we need for getting on board on the long side, and a break above 1.4122 should be our buy signal as we want to buy such strength.

A double three running is a powerful complex corrective wave and it is almost always being followed by an extended impulsive move. Hence, our target to the upside should be the 161.8% extension on the chart that comes with this analysis.

In conclusion, looking to go long on a move about 1.4122 with stop loss below the double three running correction end (1.3699) and a take profit in the 161.8% extension (appox. 1.4900)

Screen shot 2013-10-22 at 8.26.49 AM

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