In previous posts, we discussed the alternation in corrective waves. In this post, we’ll show an example of alternation and the speed of price movements.
The alternation and the speed
In previous posts, we applied the alternation principle to corrective waves. This time we incorporate a new concept to the alternation principle: the speed. To understand this concept, observe the USDCAD daily chart.
– Speed and Reversion. The first case corresponds to the end of the bullish cycle and the change of the trend. The last movement started in October 2017 soared developing an angle of 75°. The price action drove to the price making five waves. Once the price completed the upward movement at 1.46899, the Loonie started to fall with an angle of -76°.
– Corrective waves and time. Consolidation structures alternate one with the other. We observe the retracement started in April 2016 that ended in May 2017. This movement had a duration of 104 days. The second sequence, from September 2017, still is running with 628 days.
We expect a new high to the area between the 200 (1.3664) and 227.2 (1.3738) of the internal wave (black Fib expansion). If USDCAD reaches this zone, the next move should be a bearish reaction to 1.3466 level, giving back the 127.2 level. The invalidation level for the bullish path is 1.3357.
Remember that the price is not compelled to move as our forecast proposes. The charts released corresponds to the Elliott Wave Theory application.