DXY and USDCAD at multi-year highs; expect resistance

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:

  1. Price may still exceed these big levels so treat as zone than discrete level.
  2. Because they are found on higher time frame and have precedence, they are significant so treat with respect.
  3. Do not attempt to play breakout.
  4. Strong likelihood of consolidation.
  5. Consider them as take profit levels.
  6. Lower time frame trends/momentum will continue until reversal patterns are built.
  7. With sufficient retracement, traders can continue to ride current trend.

Previous discussion on USDJPY case study here.

Dollar Index monthly chart, 1997 to 2015

Dollar index; stars mark spots where level acted as turning point

USDCAD monthly chart. 1999 - 2015

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 was ranked #23 out of The Top 70 Twitter Accounts To Follow In 2015 by MahiFX. Come find Tiong Hum on Google+
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