What's up traders, I hope you are all having a good trading week so far.
Here we are analyzing EUR/CAD on the 4H chart.
Price recently had a downside impulse leg, and has since been correcting to the upside. Recently, the correction has slowed, and has gone more range bound, implying a loss of steam from the bulls.
Knowing this, I put EUR/CAD straight onto my watch list (Knowing there was localized structure right near the level price was currently trading at) and have been watching for a set up. When I analyzed the 1H chart, it was then I discovered the sideways support channel which is encapsulating the correction.
With the above knowledge, I realized one way to get into this short is to find a way to know that the long short term uptrend (The corrective upside leg) was definitely going to stall, and I needed to know also when price has officially broken this temporary uptrend. How do I do this, you ask?
How do I determine when the price has officially broken this temporary uptrend?
I use the sideways support channel as my indication if the short term correction up trend is finishing. Why? Because if the correction has been bouncing on support, then if it breaks, obviously the short term trend has expired!
How can I determine if the temporary up trend is definitely going to stall?
If you see the above analysis, you will see price hit a key Fibonacci retracement resistance level, and price has extreme weakness when it hit this level too, so this confirmed to me that this level is obviously a hidden resistance level. Further that the down move was so eager due to the massive rejection Doji told me that price was thoroughly exhausted at this level. It was likely to stall.
I am expecting EUR/CAD to break the channel support level at 1.5120, and have a down side move to my target level at 1.4770.
Bare in mind that price may retest the support channel as a new resistance before the down move begins.
Also bare in mind that the target we have is a measure move of the previous impulse leg, making it a 3 wave move. Also, the 3 wave move coincides with previous price action structure support back in November.
Tom, are you still confident in this short after recent activity?
TomProTrader
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@preeasy22, Of course, It's going better than I expected.
A retest on support turned resistance is perfect for a strong down move. Will hope to see more upside.
preeasy22
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@TomProTrader, If you dont mind, how much more upside would you like to see before the descent? Thanks in advance as this is i nvaluable to my learning process!
TomProTrader
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@preeasy22, I think it has already tested at 1.5157 (The latest candle), and now all upside is done.
I was watching upside until the sideways channel support was tested as a new channel resistance (The dotted line where yesterdays candle approached on the high wick)
Now this has happened, all bets are for the downside.
preeasy22
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@TomProTrader excellent, thanks a ton. I enjoy following your analysis throughout, you have a great way of explaining the confirmation process. Cheers!
TomProTrader
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@preeasy22, Not a problem. I am glad my content helps.
If you could give some of my recent idea posts a like, I would appreciate the support. :)
Thank you.
NeverNO
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EURCAD
it may be that you are right but sometimes it is not bad to consider another view as an alternative ... this my current view works only if we see a close on a daily basis above 1.5349, otherwise down with target 1.4804 / 1.4778 & 1.4595. .. from the level would be possible again rising to 1.5897