Hints of change in USDCAD
Received a few questions with regards to the following tweet which will be clarified in this post.
$usdcad at key resistance and that glaring 1234 h4 that's bearish
— TerraSeeds FX Tflow® (@terraseeds) December 23, 2013
Looking at the Big Picture. We see that price is currently at a strong band of resistance.
We can also see a possible hint of the move coming via a forming chart pattern near the resistance.
Zoom into the Lower Timeframe on H4. We can see a 1234 at the right side of the double top. Although point 4 exceeds start of flow, this occurrence is common in a double top pattern, where the WR (pt 4 is higher than start of flow and higher than pt 2) often suggests a valid change of trend. Note this is not the typical 1234 as we teach (typical one is where 4 is lower than start of flow), however, the fact that there is a WR brought attention to this trade.
For USDCAD there are 2 possibilities:
- Trade on the second top, where second top can be broken down into 1234 as well
- Wait for DT pattern to complete, a down flow to establish minimum in h1, then wait for a 1234 pattern
Ultimately this is a counter trend trade as the previous H4 trend is still up. Price would need to clear below the support for any chance of heading lower.