Elliott Wave 5.0 "Reboot"

Monday, January 18, 2016

Canadian Dollar Crash Review

In the chart below it would be very easy to conjure up stories how our Canadian dollar is heading into the abyss as hyper inflation starts to set in. Everybody hates our Canadian dollar and next thing you know we will be bringing out our little red wagons full of Canadian paper dollars just to buy some  hot house tomatoes or strawberries.

After all, this is what they will say when the US dollar takes a nose dive. Hyperinflation will not happen  as it would only take about 5 years when it does and now it is getting close to an 8 year bear market already and still no sign of money wagons in the streets. The real money wagons are colored green and are the size of our debit cards. 99% of Canadians would love to see these little green wagons get filled. The last thing Canadains will do is let the little green wagon to get too full. 

I'm just kidding folks as I'm making a point that hyperinflation or the demise of a currency will be far more obvious and devastating than we can imagine. We just have to look at many other currencies that have already imploded to see the fundamental results of a currency price crash.  

The people that love our low dollar are our exporters and the American tourists that spend money here as they only have a short jump across our borders.  For fixed income people our low CAD bites very hard.  

As of last night our CAD hit another bottom at about 68 cents. You can tell how bad that is when you compare an ounce of silver price in Canadians dollars, and  an ounce of silver priced in US dollars. 
The difference will be very close to our exchange rates.  

For gold and oil to head north we need our Canadian dollar to turn as well, as it is not going to separate or diverge from this age old relationship to commodities.  If we start back at the 2008 CAD peak we have a wave pattern that has crashed right along with oil. To make it fit I looked at our Candaina dollar as a potential diagonal wave pattern with 5 waves down in Minor degree. The CAD would have to land on a Primary degree bottom and I would have to go far back in my records to get a very early pattern of the CAD to get a better wave count. Having close to 80,000 files just in raw financial charts alone, I have to do a major search to see if I can find the big pattern in our CAD. 

I can fit the big crash into a zigzag even though both runs of 5 are diagonals, but they are still two different diagoanls. As longs as they alternate in the pattern, I can take it. On the next update I will drop it down by one degree which we would then get a potential 3 wave bullish phase in the next few years. In 1919 commodities and silver made a huge top from which all commodities crashed into a bear market for 13 years. In not saying that this going to happen now, but if another bullish phase intervenes, we may take until 2021 to hit the next major bottom.  

As we can see there seems to be a pattern that runs for an entire year where trends change even though they were brief changes.  On the very small Intraday scale the CAD has started in what looks like an impulse and it would have to keep doing this if we have any length in the next impending bullish phase.