USDCAD Very Strange Set-up
TLDR:
Long Form Description & Explanation:
I have been staring at this chart all day, and until about an hour ago, it made no sense. I started applying a theory I have been using very effectively with the euro, that basically studies how a trend/move is only relevant to itself. Each line is the exact same angle, all parallel channels.
What's extremely odd is what I see on the daily chart. It is making an upwards channel, which in itself is not very out of the ordinary. What is strange, is the distance between the breakout, and new lines in the consolidation between flip zone A (Future potential support, resistance in the trader eye right now) It lines up very much as if it will create the exact same channel, right on top of itself, in the same way, as it continues to climb.
If you measure the distance of the channels, they are 500-535 pips wide (very similar). The absolute peak of the last channel is the center line of the new channel. If you turn your head sideways, it looks like a sideways market behavior, as any other pair would do, just on an upward slope. only using flip zones to react from, and the angled lines are support and resistance.
In simple terms, think of the trend lines as horizontal, and the flip zones with red centerlines as you would observe a trendline, and imagine this channel was sideways. Basically flip your thinking on what each is supposed to do.
Looking to take a long trade and be a part of this oddity, around the sub zones and trend channel extreme areas. Could have an entry from either (1) (2) or (3) as the trendline. I say this because observe how the price reacted each time it crossed lines. If we follow support patterns, usually the middle touch is the deepest, with the touch before and after coming close but no cookie. With that thinking, I expect the most likely entry to come from point 2.
Despite this, because of the odd set up, I intend to just place a stop loss trade entry at each level, using set 38 pip stops. This one has a lower pip value so the stop can be rather larger than most pairs and not be as significant for the size used. I also pick the 38, because of the pairs ATR value on the 1 hour chart. This also tends to fit quite nicely with the price pattern as if the 38 pip is broken below the trend line currently, it will step down to the next. The trend lines have a range of about 90 pips, so this will allow a proper entry at each level with insane risk for the attempts, as the stop from the first entry would have to be about 70 pips off entry to not try from any other point, and stacking in will be unnecessarily risky, because we are in the middle of a range market condition looking at it like normal. Still, this would be the better place to buy over sell, but mind the distance to the next flip zone (C) It is almost 350 pips away. If All entries get stopped out, there's 250 pips left to the bottom.
If this does continue, as peculiar as it is, I will use the green line as a guide for taking profits, as it is the beginning of the extreme of the channel, should this be a new channel forming. Ultimately I'm targeting the 1.40-41 range in the end. Depending on the entry we get, the R for the opportunity will range from 12-19 R, a fairly large one. This trade may take time, but I believe what I see will play out similar above the older channel. It is about the only thing that makes sense, with the violent actions up then down, but strange repetition of holding trend lines as strong support over zones.
Most likely outcome is a response from point 1, the extrem line of the previous zone. This is also a flip zone, just in trend line form, and lines 2 &3 are just overlap of extreme buffer zones(where range buyers and sellers are congregating) If 1 does not work, 2 is a possibility just because pattern, but worst case I expect 3 to hold in the end and then turn upwards. I don't think we will make it to flip zone c right now, but it is also likely just a normal market expectation or behavior.
Entries with stops will be used.
Large inverted hammer off the flip zone B adds to the idea the flip zone redline at the trend line is a great entry point for this.
- Odd stuff goin on...
- Just buy at 1 (Red Line Green Dashed Line), 2 (Next Redline Blue Dotted Trend), or 3 (Last Blue Dotted Trend Line, Last Red Dashed Sub Level), with 38 pip set stops at each one...
- 12-19 R trade using green "Profit" Line as target...
Long Form Description & Explanation:
I have been staring at this chart all day, and until about an hour ago, it made no sense. I started applying a theory I have been using very effectively with the euro, that basically studies how a trend/move is only relevant to itself. Each line is the exact same angle, all parallel channels.
What's extremely odd is what I see on the daily chart. It is making an upwards channel, which in itself is not very out of the ordinary. What is strange, is the distance between the breakout, and new lines in the consolidation between flip zone A (Future potential support, resistance in the trader eye right now) It lines up very much as if it will create the exact same channel, right on top of itself, in the same way, as it continues to climb.
If you measure the distance of the channels, they are 500-535 pips wide (very similar). The absolute peak of the last channel is the center line of the new channel. If you turn your head sideways, it looks like a sideways market behavior, as any other pair would do, just on an upward slope. only using flip zones to react from, and the angled lines are support and resistance.
In simple terms, think of the trend lines as horizontal, and the flip zones with red centerlines as you would observe a trendline, and imagine this channel was sideways. Basically flip your thinking on what each is supposed to do.
Looking to take a long trade and be a part of this oddity, around the sub zones and trend channel extreme areas. Could have an entry from either (1) (2) or (3) as the trendline. I say this because observe how the price reacted each time it crossed lines. If we follow support patterns, usually the middle touch is the deepest, with the touch before and after coming close but no cookie. With that thinking, I expect the most likely entry to come from point 2.
Despite this, because of the odd set up, I intend to just place a stop loss trade entry at each level, using set 38 pip stops. This one has a lower pip value so the stop can be rather larger than most pairs and not be as significant for the size used. I also pick the 38, because of the pairs ATR value on the 1 hour chart. This also tends to fit quite nicely with the price pattern as if the 38 pip is broken below the trend line currently, it will step down to the next. The trend lines have a range of about 90 pips, so this will allow a proper entry at each level with insane risk for the attempts, as the stop from the first entry would have to be about 70 pips off entry to not try from any other point, and stacking in will be unnecessarily risky, because we are in the middle of a range market condition looking at it like normal. Still, this would be the better place to buy over sell, but mind the distance to the next flip zone (C) It is almost 350 pips away. If All entries get stopped out, there's 250 pips left to the bottom.
If this does continue, as peculiar as it is, I will use the green line as a guide for taking profits, as it is the beginning of the extreme of the channel, should this be a new channel forming. Ultimately I'm targeting the 1.40-41 range in the end. Depending on the entry we get, the R for the opportunity will range from 12-19 R, a fairly large one. This trade may take time, but I believe what I see will play out similar above the older channel. It is about the only thing that makes sense, with the violent actions up then down, but strange repetition of holding trend lines as strong support over zones.
Most likely outcome is a response from point 1, the extrem line of the previous zone. This is also a flip zone, just in trend line form, and lines 2 &3 are just overlap of extreme buffer zones(where range buyers and sellers are congregating) If 1 does not work, 2 is a possibility just because pattern, but worst case I expect 3 to hold in the end and then turn upwards. I don't think we will make it to flip zone c right now, but it is also likely just a normal market expectation or behavior.
Entries with stops will be used.
Large inverted hammer off the flip zone B adds to the idea the flip zone redline at the trend line is a great entry point for this.
Comment:
Very nice rejection off the point one line. Once retail opens it should drift back and entry will be taken then
Comment:
First order set 1.3495 with a stop at 1.3457
Trade active:
Order filled at 1.34986
Comment:
1.34358 entry point 2 taken. First order from point 1 stopped out, thought to trail stop, but did not (spread account, tired of calculating 🐒) Stop on this order 1.34
Comment:
The way it is reacting between the pattern lines, is sor of expected, so this probable long term pattern is probably a long term pattern still
Comment:
Expecting price to retraceto the end of the day (reactions from the 4 hour level touch, and the multi day triangle pattern shows as a retest and drop. This run was like the last, fairly straightforward. The second rejection is off the major trend line, also a sign for short, but looking at the overall picture, I think this is meant to get traders who are looking too closely.
1.083 is where I'm expecting it to happen. We have a level that is important, but for the most part ignored on the way up, and most times, this level gains a grip after it gets ignored like that. It also lines out with the breakout line from a few days ago. The run across it before, I'm sure it's still in play as a watch point/divergence point.
Looking close (3-5 days), we're looking short, but looking since October last year, I don't think it's done, just taking a break.
We'll drop back after open or close to the end of the day, then head back to punch through tomorrow. Lot of short term looks will help make it happen, but the long term and month to month traders I expect to be waiting there to re enter as well (common rule is don't trade Monday or Friday) so bigger players may have stayed out of it yesterday and want back in today on new positions
1.083 is where I'm expecting it to happen. We have a level that is important, but for the most part ignored on the way up, and most times, this level gains a grip after it gets ignored like that. It also lines out with the breakout line from a few days ago. The run across it before, I'm sure it's still in play as a watch point/divergence point.
Looking close (3-5 days), we're looking short, but looking since October last year, I don't think it's done, just taking a break.
We'll drop back after open or close to the end of the day, then head back to punch through tomorrow. Lot of short term looks will help make it happen, but the long term and month to month traders I expect to be waiting there to re enter as well (common rule is don't trade Monday or Friday) so bigger players may have stayed out of it yesterday and want back in today on new positions
Comment:
*today meaning after open (tomorrow, I'm on EST, so I tend to get a day off 😂)
Comment:
One other thought train is the ones who got in last week on the run up may also be looking at the failed break on the 4 hour (looking at it closely) and may take their positions out, then the restes triangle traders may see the drop and jump on, helping price get back down there for us
Comment:
Disregard last three comments (wrong idea open on the phone 🤦) setting the target on this buy at 1.34970
Comment:
This one is following along still although a little faster than I expected. I'm thinking price will move back up to use the dashed yellow line as the trend line retest, then come back for the 3rd entry line.
Comment:
No changes going into swap, day swap spread on this one is similar to the EURUSD and this position is above break even at the moment
Comment:
News barely missed stopping this one, still active, but this pair does not move as I was expecting. More of impulse then sit a while, so it could take a bit to finish this one. The numbers are good but the way it moves may not be a good pair to me, I may get impatient easily with this one 😄
Trade closed manually:
Stopped the point 2 entry, small gain of 46 pips but lower pip value so not very significant. Will still look later for the entry 3, alert on the trend line 3, and I'll watch for entry there, as that looks to be the most likely place it will finally rise up from. We are back in the larger channel at this point, so it makes a it a bit more likely it may not get back out yet
It is a rather unconventional analysis, but given the fact I used this exact theory on the eurusd to make the 100 line layout on the 9th, still takes trades from, and have only added, but never adjusted any of it, gives me strong reason to think this will work out. The measurements are just too similar, from the overall width of the channel boundaries, the consistent reactions at each extreme, sub extreme, and midlines, plus the almost identical ranges of the extreme sub trends. Then the consistent size of the consolidation zone, with price reacting at the same angles as it did in the lower channel to the same degrees, short to acknowledge, longer to make the point, dip then go, then come back, brush along it, then go. This consistent pattern each visit to the trend lines makes me think that along with the deceleration on the daily candles, paired with the location in the flat channel, showing a strong reaction with the inverted hammer makes it most likely it will go from point 1. I just also see that point 2 and 3 follow along the rising line pattern it has been following so far.
I have been looking at this chart all day because I wanted to choose a pair to "stress test" my risk management system, and duplicate the results a second time from a "Micro" account. When I say micro, I mean $35 "micro". This account can hedge, and order of positions is any in any out, has a high leverage 1:1000 (I use it as "if there's more than $1 in there, I can place a trade", not the other way around). I have spent a bit of time reviewing the pip count, swap, spread, overnight, and all the "numbers" for this, as well as worked out where the right trade levels should be. If this trade does not work from the third entry, then it will become hedged, not stopped out, and this will be the official start of the duplication challenge I have set for this system. $35, 500 pips, and thats's it. Goal is to double it. Wrong 3 times, and the 4th trade goes wrong, account is blown. It's $35 so not much risk for the attempt. If the sytem works, this should be a cake walk working it out should point 3 not work.