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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

Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’. Operates multiple strategies.

“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.

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