AUDCAD AB=CD 1H, 3.07 Risk to Reward
Hi traders,
An AB=CD pattern has formed on the AUDCAD. This is a pattern that has already previously been confirmed and actually has reached the management take profit previously as well. Regardless, it has returned to its PRZ, giving us another opportunity to enter.
The PRZ is comprised of just 2 ratios, the main one of which is the 1.414 BC projection. This is at 0.90370.
The second ratio is the BC layered one, or the 1.618 BC projection. This is at 0.90499.
Looking at past price action, it is clear that the approximate area of 0.90500 is a key level of resistance. Price has tested this price multiple times, each time failing to break higher. With price now nearing this level, this gives us two possibilities: the same rejection downwards as in past times, or a violent break upwards past the key level.
Something important to note here is the Canadian CPI MM coming out in less than an hour. This will be the ultimate decider in whether I enter. We are looking for a CPI figure higher than the estimated 0.2% for a trade in the direction of a stronger CAD. However, it is also important to watch price action following such a news release to look for the overall market reaction, and whether the key level will hold.
Stop-loss is set currently at 0.90604, giving enough room for price to move, but more importantly, higher than the 0.90500 key level. Price hitting the stop loss would therefore also reasonably conclude that price momentum upwards has broken past the key level, either due to the news release or otherwise.
Take profit is set at two levels, management and final. Management is at the 0.382 AD retracement, or 0.89936. At this level, we are looking to move our stop-loss to break-even and consider taking partial profit. The final take profit is at the 0.618 AD retracement, or 0.89669.
Thanks for reading, and keep an eye on that news!
Kevin
An AB=CD pattern has formed on the AUDCAD. This is a pattern that has already previously been confirmed and actually has reached the management take profit previously as well. Regardless, it has returned to its PRZ, giving us another opportunity to enter.
The PRZ is comprised of just 2 ratios, the main one of which is the 1.414 BC projection. This is at 0.90370.
The second ratio is the BC layered one, or the 1.618 BC projection. This is at 0.90499.
Looking at past price action, it is clear that the approximate area of 0.90500 is a key level of resistance. Price has tested this price multiple times, each time failing to break higher. With price now nearing this level, this gives us two possibilities: the same rejection downwards as in past times, or a violent break upwards past the key level.
Something important to note here is the Canadian CPI MM coming out in less than an hour. This will be the ultimate decider in whether I enter. We are looking for a CPI figure higher than the estimated 0.2% for a trade in the direction of a stronger CAD. However, it is also important to watch price action following such a news release to look for the overall market reaction, and whether the key level will hold.
Stop-loss is set currently at 0.90604, giving enough room for price to move, but more importantly, higher than the 0.90500 key level. Price hitting the stop loss would therefore also reasonably conclude that price momentum upwards has broken past the key level, either due to the news release or otherwise.
Take profit is set at two levels, management and final. Management is at the 0.382 AD retracement, or 0.89936. At this level, we are looking to move our stop-loss to break-even and consider taking partial profit. The final take profit is at the 0.618 AD retracement, or 0.89669.
Thanks for reading, and keep an eye on that news!
Kevin
Trade active:
CPI at 0.5% versus 0.2% expected. Entered short.
Trade active:
First take profit reached. Moving stop loss to break-even, and depending on coming price action, may consider taking partial profit.
Trade closed: target reached:
I exited the trade to secure profit. The reasoning for doing this is there is a loss of selling momentum downwards in the MACD, and the previous reversal from the AB=CD created a pivot point of support that price will have to break through to reach the final take profit.