In my last post (see related Ideas: "QUICK ANALYSIS: USDCAD: About To Break Out To Finish Wave V"), I was hinting that this pair would break out of its' long consolidation soon and start moving up to possibly finish the wave 5 of the main trend. So with the recent price action, has this move up started? I hesitate to say definitively that is has because there isn't any solid confirmation just yet.
What I am showing here is the there was a bullish bat that was completed right at the bottom trend line of the contracting triangle pattern. What I also drew in is a POSSIBLE POTENTIAL bearish crab pattern that has it's C point right at that same point where it hit the bottom trend line. If both these patterns hold and prices do not reverse back down to take both of them out, then it's a good probability that a wave (3) has started.
If prices do still continue to consolidate and whip back and forth and does reverse back down invalidating both the bat and the crab, then if it breaks through that bottom trend line, there is a POTENTIAL bullish perfect Gartley waiting to be completed which could send prices back up. If this happens, then that would be a false break down below the triangle and a move back up from there would be a STRONG signal to go LONG.
MY TRADE PLAN I didn't buy on the bat completion as I needed to see more bullish price action before getting in. So I am sticking to my original plan which was to wait until a break out ABOVE the triangle to get LONG. If and when that happens, then that would also break the B point of the crab pattern confirming its' C point and increasing the probability that the crab would complete.
*DISCLAIMER: Please keep in mind that I am not giving any trading signals or trade calls here. Only providing my own trade thoughts for your benefit and insight as to my trading technique and style. Please don't ask if you should or should not take the trade or ask for stop loss and take profit levels. Any SL or TP given on my trades are my own I have used for my trade and are not recommendations for you to use. If you are not sure, then you do not have a trading plan for yourself in place. I suggest you make one before you continue to do any trading!
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EDIT: In the chart, in the comment about the POSSIBLE POTENTIAL bearish crab pattern, I mention that the "B point was NOT set". I meant to say the "C Point was NOT set". Not the B point! Sorry for the confusion!
kukuruubanzai
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really nice analyze :) keep up the good work
EverythingForex
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thanks! I hope it helps you! GL!
glennmercer
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Great analysis. Although the C point on the blue bat exceds .886ab I'm with you on buying the BAMM line as it lines up nicely with the break of the TL. When wave 5 does break I anticipate a large move since neither waves 1 nor 3 were extended by my wave count.
EverythingForex
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Thanks. Allow me to explain about that C point some. First, that is a crab. Not a bat. Did I say bat? My bad. But for the way I use patterns, As long as there is not a bar CLOSE below the .886, for me, I still consider it valid. This is something each person must consider on his own as Scott Carney was never that specific about that rule. He left it kind of vague. But in my experience, as long as it didn't close below it, It works just fine.
Just keep in mind that the whole point of using the patterns is to be able to define and control your stops so that your losses are small relative to the potential profits. In the case of taking a trade using the C point, the stop would obviously go below the .886 on a bar CLOSE. and also the X point of the pattern. This makes the stop loss pretty tight and defined making a very good trade.
Hope that explains it. Good luck!
EverythingForex
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By the way, Glen....I like your avatar/logo. Very clean and nice. I'm a fan of clean design. :-)
glennmercer
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Thank you I like to keep it simple :D By the way, I'm almost done your third book recommendation (Vol. 2). The other two have complemented my trading strategy immensely, tyvm for your awesome advice!