USD/CAD hit a strong resistance level overnight (the level was formed a few years back and has provided S/R at multiple points since then - not every time, as nothing is perfect, but enough to show the market respects it.
Given that we've identified a resistance level that has been validated by the market, we then look for additional confirmation. In this case, we can see bearish momentum divergence approaching the resistance level. This is a classic sign of traders recognising the level, and slowly reducing their position size as price approaches.
Therefore, we have a favourable risk/reward scenario to short USD/CAD.
Target levels are:
Nothing is ever guaranteed, so be on the lookout for a news event, or a quick reversal back into resistance (potentially a false breakout). If price reverses and manages to close about the resistance zone, then look for a pullback into support for a move higher.
Remember, it doesn't matter where the market goes, as long as you go with it. Never be too fixated on a positional bias.
All the best.
DD
Given that we've identified a resistance level that has been validated by the market, we then look for additional confirmation. In this case, we can see bearish momentum divergence approaching the resistance level. This is a classic sign of traders recognising the level, and slowly reducing their position size as price approaches.
Therefore, we have a favourable risk/reward scenario to short USD/CAD.
Target levels are:
- T1: 1.3185 (60 pips)
- T2: 1.3122 (124 pips)
- T3: 1.3079 (167 pips)
Nothing is ever guaranteed, so be on the lookout for a news event, or a quick reversal back into resistance (potentially a false breakout). If price reverses and manages to close about the resistance zone, then look for a pullback into support for a move higher.
Remember, it doesn't matter where the market goes, as long as you go with it. Never be too fixated on a positional bias.
All the best.
DD
Comment:
So far so good. Will keep an eye on this one as it develops.