Good day, reader. This is my first chart analysis for the blog. I’m a forex trader and I’m using a price action strategy. It’s pretty simple but it works well. Not stressful at all.
Alright, I hope you pick up some good insight about the charts from this. Today, we analyze a major forex pair.
USDCAD is on a steady downtrend since the latter half of January this year. You can observe that price has been bouncing off a bearish trend line cleanly.
The week started with a gap on the daily chart that sent price back to a previous support that’s about to intersect the bearish trend line.
This area is a point of interest since the mean, the bearish trend line and the previous support are blocking price action from reaching higher prices.
Another thing that supports the three obstacles is the gap itself. When price forms a weekend gap and slams at a strong level (mostly the ones recognizable at higher time frames), there’s a good chance that the gap will be filled. In this case, price has to go down to fill the gap.
This may qualify as a high-probability setup and a strong sell signal like a bearish rejection candle can be used to indicate an opportunity to sell. This will also confirm the previous support’s role as a swing level.
Stop loss can be placed above the swing level, the mean, and the bearish trend line for this high-probability setup.
If the Monday candle on the daily chart ends up as a doji, a sell stop below the lower shadow of the candle can be used for a breakout trade. Dojis and inside candles represent price consolidations, so breakout strategies can be applied to them, too.
USDCAD has been maintaining a strong bearish trend and a short would have big room for downward movement.