JasperForex
Short

USDCAD: Converging Bats and Butterflies

FX:USDCAD   U.S. Dollar/Canadian Dollar
The USD gained in strength last Friday after a favourable jobs report. The CAD data has also been good the last few days and they sure beat expectations Friday with their employment data. But appreciation of the USD on the back of their jobs report proved too strong for the CAD and this pair gained 165 pips before giving 35 back before market close. The Canadian economy is struggling with the low oil             prices and there is rate divergence (given the recent rate cut by the BoC             and the possibility of a summer rate hike by the FED) so I remain overall bullish on this pair.

On the technical side, we saw some consolidation the last week after this pair had been rallying the 2 weeks prior. Consolidation breads advanced price patterns and we now have the contours of no less than three bearish harmonics on the 30M timeframe, each with a distinct X-A as the anker leg of the pattern. The two Bats and the Butterfly have potential reversal zones that converge nicely and in the chart I merged them into one 47 pips wide zone marked PRZ. The profit targets of the individual harmonics converge nicely as well and I merged them into two separate profit zones.

Price has travelled only about 35% on the way from C to the PRZ, so patience is key and I am not jumping the gun. However, should the price continue to rise next week and eventually test the PRZ, I would observe it closely for a potential reversal. In that case I would enter a short, aiming to take profit in both profit zones. SL would go 10 pips behind the resistance.

There are 255 pips to be made (if this pair follows the script) and the trade has a reward – risk ratio of 3.9!

UPDATE: Price is still messing around between the C and D points of these patterns I published 21 days ago. I have now deleted them from my watch list. The patterns did not complete, there was no entry signal and I did not enter any trade here, so nothing was risked and nothing was lost. On to the next trade!
You don´t need to be a weatherman to know which way the wind blows - B. Dylan
JasperForex PRO
2 years ago
Update: PA passed the B points of these harmonics and is edging higher, towards the PRZ.
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JasperForex PRO
2 years ago
UPDATE: Price is still messing around between the C and D points of these patterns I published 21 days ago. I have now deleted them from my watch list. The patterns did not complete, there was no entry signal and I did not enter any trade here, so nothing was risked and nothing was lost. On to the next trade!
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