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The Canadian hidden Cypher

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just now
Hey guys, today I found a possible Cypher in the USDCAD . 
In my opinion, after the price will break the B point resistance would smoothly go into the completion of the Cypher D point at 1.1310 perfectly aligned with a bearish trendline , giving me the clue of possible bearish momentum around that area. a nice set-up on this trade could be to short at the completion of the D point with a stop loss above structure at 1.3182 and taking profits respectively at 1.304 and 1.295. 
Hope you'll find this helpful ;) 
do not hesitate to add info or to share your idea on it.

usdcad Cypher.png

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This one I do watch @CorbCoropFX although I am not familiar with the concept of cyphers (at least not in the conext of trading...).  Therefore I cannot comment on your analysis per se 

My analysis points to a long term rally on this pair, in line with my prognosis for a long term rally across the USD board.  In terms of the specific for USDCAD my Monthly chart shows the long term set up from the major market bottom into a rally that is currently in a period of consolidation in the from of a Pennant Triangle.  If I have drawn this right then the Pennant has recently been broken to the upside and is currently retesting.  I am not sure yet whether or not this retest is complete with a rejection into rally phase 2.

Looking at the Daily chart for more clues I see a shorter term Flag formation just above the Monthly Pennant.  This Flag may prove false in that the Monthly Pennant line is likely to be stronger (note the larger time-frame lines do not map accurately onto the smaller ones so I have drawn a fresh one on the Daily (Blue line).

I have a number of other indicators supporting the Monthly Pennant rally trigger, which I wont detail just now and on the daily I see 2 scenarios, one that I think fits yours short term:

  1. Price is rejected by the upper Flag line or associated resistance levels and returns down to retest the Monthly Pennant line, perhaps around the Fib 62% level and creates  stronger PMD in support of a rally away from this support zone and an eventual break out through upper resistance zone into the long term rally.  This turn may occur prior to Stock tops and main USD rally but the upper breakout may will occur coincidental with that.
  2. Price breaks through the upper resistance zone and CAD leads the US rally (i.e. an early signal).  We have already had PMD at the last turn at the Fib 50% so this is an eminently possible scenario.  I probably prefer #1 but let's see

Oil may play a role here as the Canadian economy is influenced by Oil.  The relationship is never 100% all the time but in general when Oil goes up CAD gets a boost, unless the USD favourables out weigh.  As it happens I am forecasting another leg up for Oil before the top out on this market so that would support another leg down for UsDCAD.

USDCAD-Monthly_111018.thumb.png.92237c5a41516ea77ce4979c8e887dea.pngUSDCAD-Daily111018.thumb.png.18ff3c55e9f729fdaa068797f698180e.png

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Other USD pairs are proving a bit tricky to trade at present, being quite choppy and thereby exposing risk to whiplash.  This is common with wave Bs so I retain my assessment and am waiting for a definitive final push up to complete the retrace before a massive bear move (bull on USD).  USDCAD is behaving much more to plan at present, having recently hit the previously identified upper Triangle line and bounced back down.  Might see another attempt to push up [which could align to a final drop leg on EURUSD and GBPUSD before that retrace rally] but the signs are looking decent for a return back to the lower Triangle line and a termination at the Fib 62%, after which I anticipate a strong rally in line with an across the board USD rally.

USDCAD-Daily_221018.thumb.png.8920ab773b5004e90e342be3b1da70c7.pngUSDCAD-1-hour_221018.thumb.png.dcdbeda45a9eba55a14f35e7c391e5d7.png

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So looks like the turn was at the Fib 50% and we will not get a return down to the 62%.  It is looking like a confirmed breakout of the Daily Triangle, would like to see some strong rally action to fully confirm but have a small retest and bounce now and a secondary Triangle breakout on the 1 hour chart, offering a low risk stop placement just below.  If we see a rally through the recent high around 13,160 I will start to become more confident.  And just as a reminder I attache my Monthly chart which shows massive potential on this pair when if blows out!

Note this pair can happily run contrary to other USD pairs, especially if Oil is weakening...

Thoughts anyone? @PandaFace @Caseynotes @elle @TrendFollower (nice trend to follow maybe...)

USDCAD-Daily_311018.thumb.png.4a299b5e59594a78fc3cd72e629599e7.pngUSDCAD-1-hour_311018.thumb.png.e4d41f077c4e10431a7441f51f1a3258.pngUSDCAD-Monthly_311018.thumb.png.6458f64b2686c30cb56cc97f06a3b1de.png

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@Mercury, I don't trade FX but it does seem prime for a breakout. So for FX traders it is about monitoring the price. It seems to be trading above it 20, 50, 100 and 200 day moving averages so that ticks a box to start with and makes this pair worth looking at. 

USD_CAD_20181031_18_42.thumb.png.9fbbecd0c937fbd3a3a75d7ac186469c.png

 

Canada’s GDP posted a small gain of 0.1%, above the estimate of 0.0%. There was also a Bank of Canada rate hike last week. Having said that the trend is looking rather bullish. What would worry me from a risk perspective would be a rather strong pullback. I don't trade FX but what sort of stop loss strategy would one be looking at on this particular trade?

I tend to catch the middle part of the trend so I never get in at the bottom and I never sell at the top as my stop loss would be triggered once a trend reversal is established.

I think there may be others who are better suited to contributing on this particular trade than me but yes from a trend following perspective this is certainly one to keep a very close eye on. 

I think along with price action if one looks at Volume, RSI and Momentum then it can assist in decision making. 

USD_CAD_20181031_18_52.thumb.png.47b8689a668ca9708aea3119a6bd24ce.png

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Thanks @TrendFollower, appreciate it is not your thing.  I get where you are coming from on the middle of the trend thing.  For me I want to trade the EW wave 3, longest and strongest move, or the Wave C or a retrace, which is similar.  Other phases are prone to sharp pullbacks and whiplash.

In terms of this set up, if the Flag formation is valid, then we should be in for a long and strong run up.  The only pull back risk is for a retest of the Flag breakout zone, that's the blue line on my daily chart.  On the hourly chart the small Triangle acts as a similar breakout so I can set my stops just below the upper line breakout point, in fact just below the previous lows around 13,125 of thereabouts.  These stops will get taken out on a hard retest or retest of the Daily Flag line but for a very small loss so I would just seek to reenter on a better lower set up.  If this pair does rally away hard then I am in great shape.

Bear in mind that we have already had a break and retest of the Weekly/Monthly Triangle, which is very bullish in my view and that retest move acts as an initial EW 1-2 retrace so the next move up should be a wave 3 (i.e. the middle portion of the trend, but very early in it...)  and will PMD on Weekly and Daily the set up is good, not withstanding the risk of retrace and retest before it really gets going.

 

Here is the Weekly chart for perspective on that Triangle breakout.

USDCAD-Weekly_311018.thumb.png.6d02dab96d3d52ba0da9786345d15777.png

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No opinion on this one I’m afraid. Continue to tag tho and I will input when I can! Usdcad is a tough one for me. 

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My entry Long from last night didn't work, the 1 hour set up was too weak but losses limited by close stops and we try again.  This time there is a breakout and retest of the Daily Flag line, much stronger.  I have oscillators coming out of over sold on the 1 hour.  The Daily Flag line looks solid at present, however until I see another higher high I cannot rule out a fake breakout scenario, which would result in a return back within the Flag channel and a likely run down to the lower line (62% Fib).  Therefore close stops are again required on this one and/or wait for the higher high to be revealed.  As this pair sometimes goes in the opposite direction to Oil I am seeking a sharp rally before a retrace (inverse of Oil road map).  However if USD weakness proves the more dominate force then the alternative scenario could easily hold true.

Trading strategy:

  1. Given the point on offer in a rally, the low risk and low exposure of a close stop Long at the Flag turn point is ok.  As I am expecting a strong retrace I would not pyramid until that was over.
  2. If the above trade is taken out then I will assume the alternative scenario and stand aside until resolved and look again for a bounce off the lower Flag line.

USDCAD-1-hour_011118.thumb.png.30848461475047faecf13490204a5568.png

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@Mercury,

When I trade a particular trend I stay in as long as I need to - i.e. until the trend reverses. It is about letting your winners run and taking losses quickly. 

Do you day trade? If you have identified a trend and decide to trade then until that trend reverses I would stay in that trade.

Day trading is a different beast altogether but I am struggling with your rationale on this particular trade. If you have identified signals which allows you to open a long position and are not a day trader then your stop loss seems too tight to me. Nothing goes up in a straight line and there will be volatility and dips. The key is to ride the trend. This trade could still fail but that is trend following. 

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@TrendFollower, no I am strictly a long term swing trader, wouldn't touch day trading with a barge pole - for me that is trying to beat the computers, no chance for me at least...  The tight stop is because either the market should turn off a retest of the Flag area or push down through into the alternative scenario.  Because I cannot yet be sure I keep a close stop, risking a possible hard retest back onto the flag and eventual rally away, leaving me behind (that's trading - risk management).  I agree your strategy (Win big lose small), which is why my stops are tight.  If a I lose a few quick trades and am successful in getting Long on a big move then I win big and lose small, job done.  I can then look at a Pyramiding strategy (leveraging my first successful trade) as the main trend (rally in this case) progresses, using the same approach.

In this scenario, should you be minded to trade Long, where would you place the stops?  I note you would actually wait to see a more confirmed trend.

 

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BTW, as I was posting the market moved down and now looks like a break back into the Flag and a possible retest of the lower line so perhaps it is a moot point after all.  Still that confirms to me my approach on this one, other than waiting of course but you never know and the upside was very attractive (and will be even more so from the Fib 62% below...

 

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update & closer look from previous chart  - support & resistance zones

Capture ccuu.PNG

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Agree @elle a break of the immediate support brings a fairly sustained drop, which should go all the way to the Fib 62% I think.

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Recent price action has caused me to reassess this pair.  I still see a likely bearish move before a strong rally gets underway, and this may coincide with both weakness in the USD generally and a retrace rally in Oil so we have some potential decent correlation there.  On the Daily chart the market has hit some resistance and a turn here would bring up the end of a possible wave B, resulting in a fairly fast bearish move down in wave C.

Trading Strategy:

  • A sort of a confirmed turn with a close stop could be ok, although I thing there are better returns elsewhere so I am no taking this
  • I prefer to watch from the sidelines to see if this pair does indeed move down to a good rally point and then consider going Long for the long term rally move on the USD generally.

USDCAD-Daily_141118.thumb.png.9e791a763f7500177a5a82904720afdf.png

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Talk about the Democrats wanting changes to NAFTA  - Loonie hit resistance

Capture uc.PNG

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USDCAD turning at the Fib 62% retrace after a drop down from a potential Wave B of a large A-B-C.  If correct the next move will be down and long & fast.  This would also correlate perhaps to a rally in Oil and/or a drop in USD.

Short off the turn with close stops just above.

USDCAD-1-hour_271118.thumb.png.1f37e8a0028a6430f27d356987ac7c14.png

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SO that wave B top wan't actually as the market rallied again but an idea that doesn't work out initially may do so at a later stage, the markets have a habit of throwing in another leg before throwing in the towel, hence patience and good stops are vital.

Now it looks like USDCAD may well have made that Wave B I was looking for and this time at the last chance saloon of a double top.  Elsewhere I have commented that we are getting a lot of deep retrace moves these days and this looks like a classic example, if it now carries on down.

The technical set up:

  • This Bearish move would be a counter trend rally so caution is needed but a double tops is a good kick off signal.  On the Daily I have a bounce back off key resistance to from that double top and NMD.  I have an ascending Triangle channel, which if broken will be a good Bearish signal.  A retrace should reach below the Wave A at least to around 12,700 to complete a larger retrace pattern Green 1-2
  • On the hourly we see the right hand of the double top, the NMD is clear.  We have had a retrace to the Fib 62% (1-2 Brown in A-B-C: just short actually so could possibly put in another test of this level) and another smaller 1-2 (light blue) in progress.
  • I will not be fully happy until the lower Blue Triangle is broken but a break of the Pink line will be encouraging
  • With the USD potentially in a small reaction rally period this market is moving contra to USD pairs.  Could be a signal that the current small Oil rally has further to go... 

 

USDCAD-Daily_291118.thumb.png.17271722bbcf02cbcdacc5ca20a59d22.pngUSDCAD-1-hour_291118.thumb.png.2ad2d7129f060af4120f7350e602881a.png

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Just to complete the story on USDCAD, looks like we got a text book Triangle breakout and now with a small retrace on the hourly chart (not shown), which if backed up with a lower low (below 13,160) should signal an extended Bearish move in line with general USD bearishness.

USDCAD-Daily_0411218png.thumb.png.b5eb4998d7243447aaf896b4212e4db3.png

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