USDCAD Long - Powerful Forecasting combination? First, credit for this idea must go in large part to our esteemed Alexander_Nikitin, who posts so may solid trading ideas here, using his XABCD pattern strategy rules.This idea of mine comes from his post linked below on USDCAD, and is another example of an idea that has been percolating form a while.
As I have been studying both Elliot Wave and harmonic (XABCD) patterns, I have noticed that often the XABCD pattern, in it's various forms, can be used to provide confirmation of our Elliot Wave count.
On this one hour chart, I have labeled a five wave motive wave, and have plotted the cypher pattern Alexander posted earlier. It isn't perfect, in that wave 4 does slightly spike into wave 1 (Elliot allows for this rarity in leveraged markets). Notice that in this case, THE CYPHER PATTERN STARTS at the end of Elliot Wave 2. Also, observe that - and this is critical, WAVE X MARKS THE FORMATION OF 3-4-5. Why is this important? Because if we can identify a true completion of a five motive wave, we can forecast with a fair amount of certainty the next move.
Eliot says the the corrective wave A-B-C often extends down into or just beyond wave 4 of the previous motive wave up, and wave 2 retraces 61.8% of previous wave 1 - THIS IS IN THE AREA OF Alexander's end point D of his pattern. Which, if his pattern completes, we have also completed 8 wave cycle, which means the next move up will mark the beginning of wave 1 AND wave 3 of the next higher degree.
Elliot Wave detractors point out, rightly so, that wave counting is susceptible to multiple interpretations, and too subjective to be relied upon. Anything we can do to minimize the subjectivity is a good thing. XABCD patterns, with their precise fib math and rules, provide one way to do this, and I am finding this very helpful.
Forecasting whehter in weather or the markets is never 100%, so everything we do should increase the accuracy of our forecast. In this case, I think USDCAD is going to higher - once it reaches the area of point D.
