What to do when trading near big resistance?
Both the Dollar Index DXY and USDCAD are now in the vicinity of their multiple-year resistance level. In the case of the USDCAD, there is an additional 38.2% Fib-R level.
Since the picture is in the higher time frame, follow these tips:
- Price may still exceed these big levels so treat as zone than discrete level.
- Because they are found on higher time frame and have precedence, they are significant so treat with respect.
- Do not attempt to play breakout.
- Strong likelihood of consolidation.
- Consider them as take profit levels.
- Lower time frame trends/momentum will continue until reversal patterns are built.
- With sufficient retracement, traders can continue to ride current trend.
Previous discussion on USDJPY case study here.
Dollar index; stars mark spots where level acted as turning point
USDCAD has one more confluence
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Soh Tiong Hum is Director of TerraSeeds Market Technician Pte Ltd. TerraSeeds is a trading educator in Singapore since 2005.
Soh Tiong Hum is a member and regular speaker at Technical Analysts Society Singapore events and has a bi-monthly lunch time event at IG Singapore on forex and stock markets. He is an avid blogger on technical analysis topics; his Twitter account @sohtionghum
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