This is 1-2, 1-2, 1-2 scenario. You cannot trade above 10400 or so. This is like the blue one on the SPX
This would be the most bullish temporarily, it is similar to the purple one on the SPX
This is the most “elegant”, you can trade to 10400 + where you hit the trend-line, a little higher is possible but not by much. All told this is probably the best scenario. It is similar to the red one on the SPX. Shown below once again for pedagogic reasons.
The Aussie dollar may shed some light on the Canadian $. It seems to be about to peak at about 90. The patterns are fairly clear and suggest a move down to follow. As both dollars have roughly moved in tandem a drop in the C $ should be viewed as the most likely outcome.
Triangles only occur in two different positions, either a B-wave in an A-B-C correction (the top one), or in a 4th wave position, i.e. one leg (thrust) below and upcoming top (of sorts). We also know that the distance travelled is often equal to the size of the mouth of the triangle, about 8 cents in the top (bearish) case and 11/12 cents in the bottom (bullish) one. In the top bearish scenario 97 is about as far as e can go which suggests a target of 89. In the bullish bottom case e may have ended at 94 implying a possible target around 106. Of course these targets can be exceeded on either side. Furthermore we know that as often as not the targets are reached at around the apex of the triangle, say early September! Within the triangle every leg must be a 3-wave affaire, this is the case at least for the first 3 legs, thereafter it gets too small to tell. Also there should be an a-b-c-d-e sequence within the triangle, however in certain extreme cases the whole thing extends to an a-b-c-d-e-f-g .
Looking at the bigger picture , I suspect that the move will be down but it is just a very educated guess. Perhaps a break of either 97 or 94 would reveal the next big move. Also , once the move has taken place by reaching either 89 or 106, the whole process should reverse with a very high degree of probability, so waiting for that may be a better trade.
By the way, this may not be a triangle at all!
To elaborate (or add to the confusion) on the earlier S&P analysis here are both the DAX and the FTSE. Generally the FTSE , being English , correlates best with North American markets.
Both market have the same pattern as the SPX leading into this latest down trend (an expanding wedge). Thereafter the similarities stop. The FTSE does precisely what it should do, which is retrace the entire territory of the wedge, pretty well precisely (the only one to do so). The DAX, on the other hand, does nothing of the sort, in fact after the flash crash it manages to double top (the tops in April and June are for all intents and purposes at the same level). The FTSE probable corresponds best with the red count on the S&P. If so both the FTSE and the DAX should have a big move soon. The DAX which is most confusing is about to complete a triangulation that has been going on for either 2 or 4 months depending how the triangle is drawn. If it is in fact a triangle it normally goes UP in a thrust, if it is not – that is if the triangle is in fact a series of 1-2s of different degrees (3 of them) it should go DOWN hard to at least reach the base of the wedge. All told , looking at all three, down is more probable!
You can click on the charts to enlarge and move them around. I have add the SPX chart below for completeness.
