4 – hour time frame showing lower lows made on the USD/CAD which possible zone to fill at 1.31140.

USD/CAD

USD/CAD Flag pattern possibly trapping long retail plays with high probabilities for downside pressure. Holding below 50 EMA, 200 EMA on both 4 hour and 15 minute time frames.

USD/CAD

Key Points:

  • Price holding below the 200 EMA
  • Price hugging below the 50 EMA
  • RSI below 50 Mid-point
  • IF: Fails at 1.31820. Provides a second opportunity to short. Wait for rejection candle.

Key Levels:

Support – 1.31370, 1.31140

Resistance – 1.31820, 50 EMA, 200 EMA

 

Entry Zone:

Optimal entry provides the greatest reward to risk ratio while supporting entry is a zone for reversal signals.

Optimal Entry – 1.31650

Supporting Entry – 1.31570

 

 Candle Reversals for entry

  • Bearish Shooting Star
  • Bearish Engulfing
  • Bearish Dark Cloud Cover

The Risk:

As traders, it is your job to mitigate the risk and only trade structures that provide high probability and great reward to risk ratios.

If you are not comfortable with defined exit levels, experiment with Moving Averages to help set solid exit rules to protect your capital.

IF: Price breaks above 1.31751 level and violates 50 EMA– this would suggest the structure is not in our favour and would be wise to reduce exposure or close the trade until a solid signal gives us reasons to re-enter.

Reward / Reward Targets:

Optimal Entry 1.31650– Target 1 1.31370 = 2.7x Reward to Risk

Optimal Entry 1.31650 – Target 2 1.31140 = 5x Reward to Risk

Supporting Entry 1.31570 – Target 1 1.31370= 1.2x Reward to Risk

Supporting Entry 1.31570 – Target 2 1.31140= 2.3x Reward to Risk