USDCAD - buying slowing, an early look for a short
Price is in an uptrend, starting in late September. It’s hard to argue otherwise. The lows marked 1-4 trend higher, and the highs I’ve shaded in green also trend higher.
And yet here I am, considering a sell. Forgive me; it’s a very early idea.
Notice the lows on the way up. The first “touch”, marked “1” doesn’t even reach the trendline. The second one wicks down and comes close, but its right back up again. The third one gets a bit closer and again, straight back up. The fourth one spends a bit of time lower and then off it goes.
Price is back at the trendline again, soon after the most recent touch. And the price seems to be hanging around a bit.
What am I saying? Simple – buyers are becoming less and less enthusiastic when picking up the lows, meaning that the trend might be starting to reverse.
Now, of course, there are many counter-arguments here. You could draw the trendline differently. The higher-high, higher-low structure is still in play, and the CAD’s enslavement to oil prices all play a part.
So how do we put all this info together? Easy, we wait for the break and retest (if I am right).
A decent trendline break does more than violate the trendline – it also takes out the low, invalidating the higher-low structure.
And yet here I am, considering a sell. Forgive me; it’s a very early idea.
Notice the lows on the way up. The first “touch”, marked “1” doesn’t even reach the trendline. The second one wicks down and comes close, but its right back up again. The third one gets a bit closer and again, straight back up. The fourth one spends a bit of time lower and then off it goes.
Price is back at the trendline again, soon after the most recent touch. And the price seems to be hanging around a bit.
What am I saying? Simple – buyers are becoming less and less enthusiastic when picking up the lows, meaning that the trend might be starting to reverse.
Now, of course, there are many counter-arguments here. You could draw the trendline differently. The higher-high, higher-low structure is still in play, and the CAD’s enslavement to oil prices all play a part.
So how do we put all this info together? Easy, we wait for the break and retest (if I am right).
A decent trendline break does more than violate the trendline – it also takes out the low, invalidating the higher-low structure.