FX:AUDCAD   Australian Dollar/Canadian Dollar
209 7 9
I spotted this set-up when scanning the market and I think it is a good example of how to trade structure. First of all AUDCAD             is a ranging pair and this is an important characteristic when trading a certain pair.

We saw a bullish impulse followed by a sideways correction. I've counted this correction as a W-X-Y             corrective combination with wave Y currently in progress. A wave Y cannot be an impulse and should therefore unfold in 3 waves.

There are many Fibonacci ratio's on the chart, hope it is still clear what I try to do. First of all we see 50% and 61.8% of the swing higher at 0.98265 and 0.97728 (green fib), second we have the inverse of wave W (blue fib), here I like to focus on 1, 1.272 and 1.382. Third we have wave relations within (length of wave W in blue and length of wave A in red. (red and purple fib) Here I also like to focus on 1 and 1.272.

This results in three confluence zones where the Blue and Green Fibs are leading since they are based on the main swings. (green boxes)

When it comes to trading this structure I'm not interested in catching a falling knife (although I might enter on a lower time frame for a better entry and higher risk/reward potential). However if we see a reversal out of a confluence zone followed by a bullish break we have a high probability trade. So there are different way's to use support/resistance , supply/demand, confluence zones or whatever you like to call them. It is a tool to help you determine high probability trade, however structure is the only leading indicator.

Updates will follow.


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Comment: For those who favor 'clean charts'.

moved as expected from the lower support zone as shown in the original chart on top.
Let's see whether it breaks again for a bullish continuation.
is the deep pullbacks after impulses on lower time frames one of the characteristics of the ranging pairs ?
SamehAnwer1986 SamehAnwer1986
maybe because the pair is on correction on higher time frame so the overall view is more corrective than impulsive ?
TimStuyts SamehAnwer1986
Yes this pair is in a correction on higher time frames and more or less always is. That's why it is a ranging pair. However that doesn't really matter when you trade risk/reward. Key is that we saw a reversal out of the projected area followed by a break. Now I like to see at least a new high but price will likely continue higher.
thanks alot
Nice analyis tim i am following this pair for a while now i don,t understand what you mean by ranging pair
i labeled this structure a abcde and now the wave e is overshooting but more likely your wave count is valid also because wave c also overshooted and thats not a valid abcde pattern right ?
Always a pleasure to see your charts helps me mastering elliot wave :)
TimStuyts glaazie
What I mean with 'ranging pair' is that there are more or less two kind of pairs in Forex, trending pairs and ranging pairs. The one tends to show more impulses where the other is almost always in some kind of corrective combination on the higher time frames. It is important to understand the characteristic of each pair because this helps understand the dynamic in the market. If you have a look at the bigger picture for AUDCAD you probably notice what I mean.
glaazie TimStuyts
yes i see what you mean in the daily TF
thanks again for the lesson :)
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