Price action did not retest the broken support around 1.2780 as I had predicted it might late last week (see 'retest' on chart), with US news early Friday morning (EST) driving the pair to a lower close at 1.26489. I had hoped to see a retrace of the BoC rate increase price movement to between the 0.382 and 0.618 Fib levels, and without this, there will be no advanced pattern formation based on that rapid movement (at least on the 1 hr time frame).
With the formation of a new downward channel (see chart), I am beginning to think it is less and less likely that a retrace to the 0.382 Fib level will occur. A clone of the broken support trend line positioned at the price lows established since the rate decision generates a new downward channel that price action has been contained within for the last 53 hours. The lower trend line (new support) has been touched three times and downward price movement has begun to slow. This could be due to low volume on a Friday afternoon during the North American session, or it might be an indication of an imminent short-term reversal in price action. The new resistance (broken support) has yet to be tested. Thus I expect price action to retest this level before continuing the bigger picture down trend.
I'll be watching price action as the new week begins for evidence to enter a short-term, counter-trend, long position with a profit target of about 70 - 80 pips, at which point I intend to close the long and enter short. Note that the yellow arrows within the channel are intended to represent price movement but not time. Price may bounce within this channel or may break to the downside through the week.
This trade idea is invalid if price action continues downward, breaking and holding below the new support.
Trade with caution. This is not trading advice.
With the formation of a new downward channel (see chart), I am beginning to think it is less and less likely that a retrace to the 0.382 Fib level will occur. A clone of the broken support trend line positioned at the price lows established since the rate decision generates a new downward channel that price action has been contained within for the last 53 hours. The lower trend line (new support) has been touched three times and downward price movement has begun to slow. This could be due to low volume on a Friday afternoon during the North American session, or it might be an indication of an imminent short-term reversal in price action. The new resistance (broken support) has yet to be tested. Thus I expect price action to retest this level before continuing the bigger picture down trend.
I'll be watching price action as the new week begins for evidence to enter a short-term, counter-trend, long position with a profit target of about 70 - 80 pips, at which point I intend to close the long and enter short. Note that the yellow arrows within the channel are intended to represent price movement but not time. Price may bounce within this channel or may break to the downside through the week.
This trade idea is invalid if price action continues downward, breaking and holding below the new support.
Trade with caution. This is not trading advice.