Price dropped to resistance that can be clearly seen on the weekly chart. I've shown 3 support / resistance levels with the white lines. After the third push to 1.3000 price fizzled down to the middle white support line and bounced.... twice. We are now in a channel. There are several ways to play this. Here are a few ways to play it at the 1.3000 level.
1. Buy once price goes over 1.3000, stop just under that level to your taste, and depending on how much of a bet your placed.
2. Buy as price approaches 1.3000 looking for it to quickly snap through 1.3000 for a quick profit, riding the momo and using a trailing stop. This method would work for you if you think it will be hard to get in once it snaps through the level.
3. Wait for the break, then the pullback. I won't be doing this since I don't see the USD and CDN being more lopsided than it is right now. But the market doesn't care what I think.
4. Don't play the upside. I'll be waiting for the upside break, but I don't think it will happen. I expect the bottom to be the favoured direction.
To get past 1.3000, there will probably need to be some sort of catalyst. Having said that, watch for the bottom white line to be broken for a downside move.
I should note that this is based on daily and 4 hour charts. I will not go deeper than a 4 hour chart now trading forex. I have scaled down my position size and will trade based on daily and 4 hour time frames. To scale down my position sizes I've had to open up another forex account at a different broker since Interactive Brokers minimum size is too large for me to use with wider stops.
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