USDCAD 60 Headfake Momentum Move

A nice momentum move into a consolidation sets this pattern up. We have a consolidation with diminishing volatility providing stored energy to the pattern. The unsustainable push leading into the consolidation area is neutralized by the price pulling back and touching the powerful 240 21EMA. The price was held nicely by this moving average giving us a great place to put our stop behind. Entry is when the price breaks the horizontal trend line of the consolidation. Look to take 25% partial profit at the low of the chart and bring your stop loss to just before entry. This is insurance on the trade should the resistance prove too strong for the bears. If the price breaks that low, however, expect a strong push downwards as the stop losses under the low get triggered.

The drawbacks of this setup are:

• The price is sitting on the Weekly 21EMA which is powerful support.
  
• The higher timeframe downtrend has not been confirmed, although it is leaning towards it
  

The positives of this setup are:

• Lovely consolidation pattern with diminishing volatility
  
• If the Weekly 21EMA breaks, we should see a strong move to the downside as stop losses get run
  
• Great support from the 240 21EMA for our stop loss
  
• Can get to break even early (at the chart low)
  
• Lots of room in the ATR for this move to happen