Direct from the desk of Dane Williams.
While USD/CAD retesting resistance and eventually rejecting did give us opportunity to short, I personally was too slow to the party to be able to trade it.
As a little fun excercise to see how effective day trading around higher time frame support/resistance zones like this can be, I want you to place that daily zone onto you charts, then zoom into an hourly and watch how price reacted to it.
You'll see there was opportunity for you to sell into short term rallies, with price always remaining below the higher time frame zone, hence capping your risk.
USD/CAD's Next Zone
But of course, there's always another higher time frame level and with the recent USD weakness we've seen sweep through markets, USD/CAD has already gone through it's next level of support.
Take a look at the loonie daily chart below.
USD/CAD Daily:
You can see that bearish momentum has meant price has gone through our higher time frame support zone and is now retesting it as resistance.
What we do now is zoom into an intraday chart and look for an area of short term support turned resistance to short off.
From where price sits right now, I can see two areas of short term support that if retested as resistance and they hold, could provide us with the short we're looking for.
Take a look yourself. All you need to do is zoom into an hourly chart and find bullish candles within the most recent push down. These are the short term zones we look to be retested.
Speak to you in a USD/CAD follow up early next week.
Best of probabilities to you,
Dane.
FOREX BROKR | Hive Blog
Higher time frame market analysis.