Today’s article will be focused on the USDCAD and AUDUSD.
The USDCAD recap:
1) The currency made 5 waves up after bouncing off the bottom of the week wedge;
2) It continued the up move from the 500-618 Fib area;
3) It went to the -0.618 target at the 1.03ish price levels (see first fib on the left);
4) The currency stalled at the target.
It should be noted that after hitting the target, the currency also stalled at the weekly resistance line of the wedge. The currency then did the following;
a) It made a double top formation on the day chart;
b) It then corrected itself downwards back to the 382 Fib;
c) And bounced up to the 618 Fib of that down move.
It is now heading south. So the big question is: what next? What kind of Forex advice do I recommend? Here are my FX tips.
As always, there are two scenarios in the world of Forex trading.
1) My expectations are that the currency could make a move back to the bottom of the week edge;
2) However, as long as we stay above the daily support line and daily horizontal support, then the day chart up trend could remain in force and we might find enough strength to see the USDCAD push through the weekly resistance.
I see the following currency trade setups:
- The 4 hour chart shows that the currency has broken the 4 hour support trend line and small fractal à a hook back to the broken support level and to the single down trend line would be a great short back to the daily bottom and day support line;
- Any break of the down trend line and a hook back would be a great trade to the upside. The initial target is the weekly resistance line;
- A break of the day chart support trend line and a hook back would be a great short to the confluence of the -0.272 target and 382 retracement or the -0.618 target and 500 Fib retracement.
The Aussie was stuck in a triangle and sideways move for the entire week so far. The currency seems to be breaking out as we speak. In Monday’s article and via twitter @winnersedgetrad we gave a heads-up of the development of this trade. We also send regular screenshots and Forex trading information, so don’t forget to join.
- The AUDUSD made a classical triangle. It formed an A leg, B leg, C leg, D leg, and then made the last move down today. After completion of the E wave the currency started its impulsive move to the upside;
- The currency broke above the top and the 1.04 resistance level;
- This resistance level was also the 618 Fib of the entire day move down from 1.06 to 1.0150.
Now that his level has been broken, the next day Fib target is the 786 Fib retracement level at 1.05. Of course the currency will at some point in time and price make a pullback before getting to that level. The target is still 80 pips away from here.
The broken top will now most likely act as a support level. A break and retest of the 1.04 level is definitely a FX trade setup no one would like to miss out on. Especially with a 4 hour candle breaking and closing above the resistance level as we have seen now.
Word of caution
If the price action to the downside when retesting the top is impulsive, then the trade setup is invalidated. I want to see a corrective price action pattern. Preferably a bull flag. Then the setup would be good to go. Once we do get to the 786 Fib at 1.05, then I will be looking for candle reversal stick patterns as I believe that the 786 could be the reversal spot for more USD strength to the downside, maybe all the way to 0.98.
Hope all is clear. If you have any questions regarding the trade ideas, please don’t hesitate to contact us for more intensive Forex training and FX advice.
That’s about it folks. Hope these Forex trade ideas will help you.
Thanks for all the sharing! And Good Trading!!
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