Loonie Strength?

I’ll be talking about a trade I am currently stalking. But first, a warning: I am in Ebb Stage. As the Psyquation results show, my win rate since January 2019 is 19% (normally 57%), and the account is down (1.6%).

In Ebb Stage, everything I do tends to be wrong! Still, an Ebb Stage always ends. Perhaps this trade will signal a return to Normal or Flow? As always, this piece is for educational purposes only and is not a recommendation to initiate the position.

Anyway, to the trade….……

I’m looking to short the USDCAD.

CONTEXT

The chart above is a busy one. Let’s take it apart:

• The red lines represent the 18-day Barros Swing and the blue lines the        5-day. The red identifies the monthly trend, and the blue the weekly trend.
• As you know, markets cycle from imbalance (directional moves) to balance (congestion structures) to imbalance etc.
• The price action in the black rectangle, from December 31, 2018, to January 9, 2019, is a directional move. Since January 9, I see the market forming a running correction; one that is now to end.
• The blue dotted line represents the next directional move.
• The Primary Buy Zone is my target for the next down move.
• The chart also displays retracements of the move from 1.2782 to 1.3664 –

1. Congestion has been taking place within the Value Area (1.3373 to 1.3072).
2. A bearish daily close below 1.3072 will signal confirmation of the move to the Primary Buy Zone.

ZONE

The chart below is the daily USDCAD. It shows a 3-bar congestion pattern. The upper boundary is 1.3306 and the lower boundary 1.3233. I will be looking to short the pair on acceptance below 1.3233. I could wait until the end of day for the sell signal, or I could look to enter intra-day for an earlier entry.

To enter intra-day, I would need to see patterns that would suggest that an intra-day signal that would carry to the end of day.

TRIGGER

The chart below is the 290-minute. We see that it has also formed a 3-bar congestion pattern within the daily one. The 290-minute boundaries are: high, 1.3242 and low, 1.3227.

The next chart, the 60-minute, displays the 290-minute 3-bar congestion pattern.

My triggers for the trade?

• A bearish conviction-close below 1.3227. My hard stop would be above 1.3242.
• The alternative will be a breach of 1.3242 that is followed by a return below the congestion boundary high 1.3242. My hard stop would be above the swing high.

The trade also carries a soft stop. I shall exit shorts on a 60-minute acceptance below 1.3227 that is followed by a bullish conviction-bar above that price (1.3227).

TARGET

I shall be looking to exit half my positions in the Primary Buy Zone. As to the remaining open positions, I shall assess the situation when the pair reaches the Primary Buy Zone target.

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