USDCAD - "The secret Magnet" - Analysing Price Action
Hi Traders!
The market is in a Downtrend.
Let's begin our today's analysis with the daily Timeframe.
Here is a screenshot of it:
So, here you can see the market clearly respects the purple "Daily Trendline".
We also posted some other ideas around this, it'll be at the bottom.
The price reached the Zone, where it was ranging in the past.
It reached the strong Resistance and made a bullish hammer pattern.
Why do we think the price will pull back?
So, you already now it is at a strong Resistance.
That's reason number one.
The second reason is this: Price Action.
Look at 20EMA and the price.
They were touching each other for a long time.
But now it is far away, which is a secret "Oversold" stage.
Just imagine a MA is a just like a magnet.
The magnet is moving with the price the whole time.
But when they start to go apart, their magnetism is so big,
that they want to get together again.
Then it's overbought or oversold.
But you have to find the right magnet, because it is changing all the time and sometimes there
isn't a magnet at all.
We suggest you to test these periods: 20; 50; 100 & 200
Did you understand everything so far?
Now you learned a new trading secret.
Let's move on to the H4-Timeframe:
It is moving in a descending Parallel Channel.
In a addition we took out the RSI-Indicator.
The RSI is showing the weak Divergence between price and indicator.
The price is making lower lows, where the RSI is at the same level.
Let's move on the Entry Timeframe (H1):
There is another Parallel Channel and the price is at the Top of it.
Furthermore, there is a turquoise Resistance at the Level 1.31326.
This is the Entry Trigger:
If the price breaks above that level, than we'll buy.
The Target Area is the 20EMA price of the Daily Timeframe.
The SL is below the last (orange dotted) low.
We recommend to trade the market carfully, because we're trading against the big trend.
Thanks and successful Trading :)!
The market is in a Downtrend.
Let's begin our today's analysis with the daily Timeframe.
Here is a screenshot of it:
So, here you can see the market clearly respects the purple "Daily Trendline".
We also posted some other ideas around this, it'll be at the bottom.
The price reached the Zone, where it was ranging in the past.
It reached the strong Resistance and made a bullish hammer pattern.
Why do we think the price will pull back?
So, you already now it is at a strong Resistance.
That's reason number one.
The second reason is this: Price Action.
Look at 20EMA and the price.
They were touching each other for a long time.
But now it is far away, which is a secret "Oversold" stage.
Just imagine a MA is a just like a magnet.
The magnet is moving with the price the whole time.
But when they start to go apart, their magnetism is so big,
that they want to get together again.
Then it's overbought or oversold.
But you have to find the right magnet, because it is changing all the time and sometimes there
isn't a magnet at all.
We suggest you to test these periods: 20; 50; 100 & 200
Did you understand everything so far?
Now you learned a new trading secret.
Let's move on to the H4-Timeframe:
It is moving in a descending Parallel Channel.
In a addition we took out the RSI-Indicator.
The RSI is showing the weak Divergence between price and indicator.
The price is making lower lows, where the RSI is at the same level.
Let's move on the Entry Timeframe (H1):
There is another Parallel Channel and the price is at the Top of it.
Furthermore, there is a turquoise Resistance at the Level 1.31326.
This is the Entry Trigger:
If the price breaks above that level, than we'll buy.
The Target Area is the 20EMA price of the Daily Timeframe.
The SL is below the last (orange dotted) low.
We recommend to trade the market carfully, because we're trading against the big trend.
Thanks and successful Trading :)!
Comment:
In the case you need it, here is the RED BOX:
