In a surprise move, the Bank of Canada cut their interest rate last week. This pair immediately rallied upon the release of that news. Tonight, the FOMC stated the timeline of any rate increase would depend on economic data. This statement seems to have given another boost to this pair, bringing the price close to the potential reversal zone (PRZ) of a bearish Bat on the 30M.
When defining the PRZ for a Bat pattern, we look at the projection of three harmonic levels. I: the 886 retracement of XA, II: an extended AB = CD pattern (in this case 1272 AB = CD) and III: a BC expansion (in this case 2272 BC). This defines a very tight zone, about 5 pips wide, represented by the orange lines in the chart. There is also some structure near this zone, which increases the edge of a reversal. Should price action test the PRZ and reverse convincingly, I would enter short. SL goes 10 pips behind the next resistance level. TP1 = 382 retracement of AD and TP2 = 618 retracement of AD.
There are 66 pips to be made (if this pair follows the script) and the trade has a reward – risk ratio of 2.9!
UPDATE: Price action did not reverse in or near PRZ and broke and closed above X. According to my rules, this Bat was invalidated. No problem, there was no entry signal so nothing was lost. On to the next trade!
This bullish trend is terrible for the Canadian economy and hopefully the OPEC might become reasonable and reduce their oil production.
Let's hope that the Boc won't cut the rates again in March.. It's too crazy.
WeeMee
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yeah the double top is one of my patterns i trade on, of course this is only a double top on the smaller time frames so far, we will see, it has a relatively small risk and decent reward potential so i left my order and its triggered.
WeeMee
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actually if it fills me there will be a nice double top, so will be a good entry pattern
JazzForex
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If the rules in your trading plan give you a reason to go short, then you should follow those rules. For me, this was a trade candidate I shared via Tradingview that did not give me a final entry signal so I stayed out. Good luck!
WeeMee
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stopped out on this one.
WeeMee
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oops, i put an order in at 1.2513 with a stop of 1.2530, maybe i should cancel it?
JazzForex
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Price action did not reverse in or near PRZ and broke and closed above X. According to my rules, this Bat has now been invalidated. No problem, there was no entry signal so nothing was lost. On to the next trade!
JazzForex
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Current spike is caused more by weakness in CAD (due to drop in oil price) than by strength of USD.
JazzForex
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I wait for 30M candle to close. If the bat has been invalided by then, I will not enter.
Let's hope that the Boc won't cut the rates again in March.. It's too crazy.