AUDCAD short, then long
Updated
I spotted this set-up when scanning the market and I think it is a good example of how to trade structure. First of all AUDCAD is a ranging pair and this is an important characteristic when trading a certain pair.
We saw a bullish impulse followed by a sideways correction. I've counted this correction as a W-X-Y corrective combination with wave Y currently in progress. A wave Y cannot be an impulse and should therefore unfold in 3 waves.
There are many Fibonacci ratio's on the chart, hope it is still clear what I try to do. First of all we see 50% and 61.8% of the swing higher at 0.98265 and 0.97728 (green fib), second we have the inverse of wave W (blue fib), here I like to focus on 1, 1.272 and 1.382. Third we have wave relations within (length of wave W in blue and length of wave A in red. (red and purple fib) Here I also like to focus on 1 and 1.272.
This results in three confluence zones where the Blue and Green Fibs are leading since they are based on the main swings. (green boxes)
When it comes to trading this structure I'm not interested in catching a falling knife (although I might enter on a lower time frame for a better entry and higher risk/reward potential). However if we see a reversal out of a confluence zone followed by a bullish break we have a high probability trade. So there are different way's to use support/resistance, supply/demand, confluence zones or whatever you like to call them. It is a tool to help you determine high probability trade, however structure is the only leading indicator.
Updates will follow.
timstuyts.com
facebook.com/timstuyts
We saw a bullish impulse followed by a sideways correction. I've counted this correction as a W-X-Y corrective combination with wave Y currently in progress. A wave Y cannot be an impulse and should therefore unfold in 3 waves.
There are many Fibonacci ratio's on the chart, hope it is still clear what I try to do. First of all we see 50% and 61.8% of the swing higher at 0.98265 and 0.97728 (green fib), second we have the inverse of wave W (blue fib), here I like to focus on 1, 1.272 and 1.382. Third we have wave relations within (length of wave W in blue and length of wave A in red. (red and purple fib) Here I also like to focus on 1 and 1.272.
This results in three confluence zones where the Blue and Green Fibs are leading since they are based on the main swings. (green boxes)
When it comes to trading this structure I'm not interested in catching a falling knife (although I might enter on a lower time frame for a better entry and higher risk/reward potential). However if we see a reversal out of a confluence zone followed by a bullish break we have a high probability trade. So there are different way's to use support/resistance, supply/demand, confluence zones or whatever you like to call them. It is a tool to help you determine high probability trade, however structure is the only leading indicator.
Updates will follow.
timstuyts.com
facebook.com/timstuyts
Note
For those who favor 'clean charts'.Note
Note
moved as expected from the lower support zone as shown in the original chart on top.
Let's see whether it breaks again for a bullish continuation.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.