Monday, December 8, 2008

USDCAD




Interesting chart pattern on the USDCAD. Triple top with an ascending wedge. A triple top gives it a bearish feel but the pattern is not valid until it breaks lower support. The ascending wedge gives it a bullish overtone. Since we don't have volume to add to the clues, we can only use price action. Notice the buyers were not waiting to buy shown by the lower lows. Also the lower lows get closer together, so they are also not waiting as long to jump in. On the other hand, look how fast price jumped off the top resistance line, telling us all kinds of sellers came in, plus its a big super fat round number (1.3000).

Buy on a break over 1.3 with tight stops, it either goes like a f'n canon, or fakes out and reverses back into the channel.


On a break out, you could also put in a short stop order below the 1.3000 line to catch the fake out on its way back to the bottom of the channel.

This is the type of pattern I would use breakkouts on, not channel trading. The converting to USD might be over, then again it might not. Use price action to guide you. Don't enter at the middle of the channel, enter at the top or bottom, this allows you to use tight stops, control risk, and have an edge.

Disclaimer

The information presented on this site is for educational and entertainment purposes only. This site contains no suggestions or instructions that you must follow, do your own research and due diligence before committing your cash to the markets. Your on your own.