USDCAD FALSE BREAKOUT REVERSAL BACK TO MONTHLY RANGE LOWS
Updated
This week I am looking to deploy capital depending on if the overall market outlooks becomes more favorable.
I have USDCAD on my watchlist as it has been struggling to break higher above 1.3600 for the past 3 months.
Recently, we've had a false breakout 3 times in the past month and each time bears stepped in and drove price back towards lows of 1.3500 creating a congested range.
Last week price attempted to go higher again and triggered buyers in but unfortunately that setup was invalidated and bull stops were hit.
A key indication of buyers getting weaker last week was that every new wave of the recent uptrend had less buyers preceding the major rejection on Friday 09/08.
I look to take shorts down to 1.3570 and see how it reacts around that support level and if strong selling continues I will take it down to range lows of 1.3500.
This is a potential +6R for this setup but due to the choppiness of recent price action this trade could also turn into a loss.
If my stops are hit, which is very tight, then I will be in cash and await better conditions to arise.
What I would look for if my stops are hit is a possible breakout back northbound, but I would need to see strong buying before deploying capital or we could experience more chop in which I will not be trading due to the continuation of poor market conditions.
I have USDCAD on my watchlist as it has been struggling to break higher above 1.3600 for the past 3 months.
Recently, we've had a false breakout 3 times in the past month and each time bears stepped in and drove price back towards lows of 1.3500 creating a congested range.
Last week price attempted to go higher again and triggered buyers in but unfortunately that setup was invalidated and bull stops were hit.
A key indication of buyers getting weaker last week was that every new wave of the recent uptrend had less buyers preceding the major rejection on Friday 09/08.
I look to take shorts down to 1.3570 and see how it reacts around that support level and if strong selling continues I will take it down to range lows of 1.3500.
This is a potential +6R for this setup but due to the choppiness of recent price action this trade could also turn into a loss.
If my stops are hit, which is very tight, then I will be in cash and await better conditions to arise.
What I would look for if my stops are hit is a possible breakout back northbound, but I would need to see strong buying before deploying capital or we could experience more chop in which I will not be trading due to the continuation of poor market conditions.
Trade active
I am now risk-free on this trade.My entry was triggered 1-hour ago shortly after this post and I have trailed my stop loss to slightly above 1.3611.
The benefit of using a smaller timeframe for my active trade management is that I can use tight stops while still benefitting from the longer term targets.
Trade closed manually
I have closed out my sells at 1.36057 due to a conflict happening at the current downtrend of today and collected +0.5R.I already was skeptical about conditions this week and am trading more conservtivley than normal due to choppy conditions preceeding my entry.
The trade lasted a little over 1.5 hours and I am happy with my result.
Price may continue to its original target or could be a full on reversal back towards daily highs.
I have been risk-averse so far this week but am willing to change my outlook to more risk-seeking if trends continue to develop with less chop later on in the week.
As you can see, trading price action is much tougher than most make it look.
I am honest and transparent with my trading and in order to fully understand price action in real-time you must be willing to know when price is slowing, accelerating, continuing & reversing in real-time.
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