USDCAD has been correcting and on the one- and three-hour chart is coiling in a symmetrical triangle. If you believe the Elliott Wave interpretation of prices, breakouts from triangles are to the same direction from which the price entered the triangle—in this case, it would be to the upside. If you believe classical pattern analysis then the break can be in either direction although it favors continuation. Regardless, price is now at the bottom of the triangle. On the one-hour chart, the most recent candles are doji, representing indecision. There is quite a bit of nearby support so I have added four small long positions, two at 1.0690 and two at 1.00692. Why separate positions? Because I still have my long position open from 1.0256. My broker doesn’t allow me to take partial profits off the table from positions added later than the first one. By having separate positions I can close them out at different times. Do I think the correction is over? I have no way of knowing but this is a good entry point for me because the stops can be tight.
Support (various uptrend lines, fib confluence, recent lows):
1.0771/76/81 (Fib confluence, top of triangle, and recent highs)
1.0848/53 (November highs)
1.0988 (Sept ’09 highs)
Here’s the one-hour chart:
© Dianne Fecteau, 2010. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.