USDCAD has retraced almost back to Daily Support and is balancing just ahead of the Support Zone. These Balance Area's make for good Breakout trades. Balance areas are simply just Accumulation or Distribution (we don't know which one it is until the market tells us, which is done by breaking out).
This trade will be valid which ever way it breaks. I would think a breakout to upside would gather the most traction but you never know!
RSI is starting to give a clue by showing some Bullish Divergence. Although, this is not a signal to enter the trade for me.
Entry - I use a Break & Close out of the Balance Area for my entry.
Stops - I use 1 ATR Above or Below the Breakout Bar.
Target#1 - I use a measured move of the Balance Area (Blue Line). -For the Upside break, Target #1 has confluence with Structure and a 38.2% Fib Retracement from the highs. -For the downside break, Target #1 is simply just the measured move.
Target #2 - I use the next Major Fib for Target #2. -For the upside break, Target #2 has confluence with Structure and the 61.8% Fib Retracement from the highs. -For the downside break, Target #2 is simply just the 1.618% Fib Extension.
I like your style of support\resistance. Similar to mine
PateSkpate
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Thanks man!
rozela99
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Nice! I would almost take this trade with ya. Key word being almost. I would love to add this kind of trading to my tool box one day. First things first though. Good luck
PateSkpate
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Thanks man! Yea, master what you are doing first. These Balance Area's are very simple to trade and have very simple rules. I mainly trade these intraday on the 5min charts. Very profitable pattern on the 5min. It's accuracy is up there with the Cypher.. Around 70% to Target #1!
rozela99
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Your welcome. Wow a 70% thats awesome.
Tecnologia_Financiera
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Nice!
Amina66
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Thanks for reminding :D
PateSkpate
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lol!
gwsnel
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Thanks for the explaination of your trade. I was wondering abaut targets and stops whit these setups.
Dont you ever wait for a retest of the breakout area for your entry?
PateSkpate
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You're welcome! Only time I use that method for entry is when the break & close gives me LESS than a 1 to 1 Risk/Reward. I found in my backtesting that I would miss a lot of winning trades if I played it very conservative by waiting for the retest. Hope that helps!