Today’s post focuses on the Australian Dollar (AUDUSD), Canadian Dollar (USDCAD) and the NZDCHF.
The AUDUSD bullish 4-hour channel (blue lines) offers various trading opportunities for Forex traders such as bounces off of the bottom (green circle) and top (orange circle) of the channel and breakouts north and south (red arrows) of the channel. Considering the larger bearish trend on the weekly and daily time frames, I am especially interested in a bearish break out setup. My primary focus for judging the strength of the break out will be these 2 points:
- A majority of the candle must be below the support trend line;
- The candle close must be near the candle low and not further away than 40%.
When these 2 criteria are present I am taking a short with a stop loss 17 pips above the breakout candle or above the bigger top. I will base the final decision on the stop loss placement by reviewing the Strike Trader’s ATR and stop loss rules to ensure that the stop loss is beyond the average zone of consolidation (thereby avoiding a whipsaw).
The target could be the -27.2 Fibonacci target at 0.8440, but price might not fall to this level in one short without any major pullback. A defensive method of avoiding bigger consolidation or pullback is to apply a trail stop loss. Using a trail for every 4-hour candle, however, would inevitably be too tight. A better solution could be using 1-hour tops or only bigger and sizeable 4-hour candles.
The USDCAD offers various break and/or bounce trade setups as well. Here is a summary:
- Purple: weekly resistance trend line;
- Magenta: weekly support trend line;
- Blue: uptrend channel;
- Green: bull flag chart pattern;
- Dark green: intermediate support trend line.
Basically, all of these lines present entry and exit opportunities. Or in other words, the USDCAD daily chart has many decision levels nearby. Here too candle stick patterns can help Forex traders make the final decision whether a bounce is occurring or whether a breakout is sustainable. The screenshot down below shows a summary of the possibilities.
The NZDCHF is pushing higher and higher but in this case I am mostly interested in a reversal back down. The bearish swing high and swing low is still intact and when placing a Fibonacci on it, a 78.6 Fibonacci retracement level could be a strong resistance level. The reversal zone just gets stronger when we add the -61.8 Fibonacci target to the list of confluence. And last but not least, a rising wedge chart pattern formation also indicates the likelihood of a potential reversal sometime soon.
What do you think of Loonie and Aussie? Are they tradable according to you? What levels are you interested in trading?
Let us know down below! Thank you for sharing and wish you Happy Hunting!
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