CAD CHF TREND LINE BREAK AS EXPECTED BUT WHAT NEXT - forex trading system resources

CAD CHF TREND LINE BREAK AS EXPECTED BUT WHAT NEXT ~ forex trading system resources

Having broken the Outer Uptrend Line as expected, the CAD CHF is now at a bit of a crossroads. The Double Tops that were formed were strong enough to lead to the bearish break, but may not be enough to push the pair down much farther. We could see the formation of a Range that eventually leads to the start of a downtrend, but if we see a strong Bull Candle above the Counter Trend Line (CTL) the Uptrend could continue.

Daily Chart below shows the breakout that took place below the Inner and Outer Trend Lines. Supporting this breakout were the Double Tops and the fact that we had rallied by  600 Pips, exceeding the Monthly Range for this pair.

DAILY CHART

Despite this break, the Double Tops seen here were too weak to start a significant downtrend. The first part of this pattern was strong, but the weakness of the candles for the 2nd `Top` rendered the signal too weak.

DAILY CHART

The candles shown here, however, are closer to what we would expect for Double Tops.

DAILY CHART

So what can we expect at this juncture? Well one of two options. 

SCENARIO 1 - CONSOLIDATION ?

Since this breakout may not take place right away, the market could go into a period of Consolidation in the form of a Range. This is typically what you will see when the Monthly Range is hit and/or a Trend Change is going to take place.

DAILY CHART- RANGE SETUP?

We would see a rally to form the 2nd Support to complete the Range followed by a U-turn to breakout bearish. The new trend would be formed as the Swiss Franc regains lost ground against the Loonie.

SCENARIO 2 - RESUMPTION OF UPTREND ?

The Uptrend could actually resume with a simple Bullish Candle and break of the Counter Trend Line (CTL). Even though we are at the Monthly Range of the currency pair, trends can also continue once the setup and signals are strong enough.

DAILY CHART

Until the market shows us its cards, lets wait on the sidelines and then take appropriate action. Get familiar with how to trade these setups and then enjoy the Pips as they continue to roll in using my Methodology.

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300 PIP AUSSIE BREAKOUT MAY HAVE TO WAIT - forex trading system requirements

300 PIP AUSSIE BREAKOUT MAY HAVE TO WAIT ~ forex trading system requirements

This pair has recently attempted to start a breakout from a Range on the Daily Chart, with a break of a Counter Trend Line (CTL) setup below the Support. This is a common way for Consolidation breakouts to begin following a test of the Range with this CTL barrier. However, the bearish break candle was not strong enough and would need to be followed by another bear candle to convincingly start the downtrend. Nevertheless, with a break of the Uptrend Line already taking place and a False Breakout of a previous Consolidation, it is only a matter of time before the USD begins to regain lost ground against its Aussie counterpart.

We can see the CTL setup that was broken in the graph below. CTLs tend to appear at the Resistance or Support of a broken Consolidation as a way of testing these areas before the breakout begins.

DAILY CHART

Despite being a strong candle on its own, the break below the CTL was not far enough to start the breakout. The distance below the CTL normally has to be greater such as in the example below for the CAD CHF this year.

DAILY CHART- CAD CHF

Whenever the breakout is not strong enough, one of two things can take place. There could either be a False Breakout that takes us back inside of the Range or another, stronger bear candle that continues the breakout short. What could tip the balance in favour of a bearish move, however, are three technical factors;

1. The Break below the Uptrend Line;
2. The Plateauing, Sideways Movement of the Currency Pair;
3. A Previous False Consolidation Breakout;

It is very common for trend changes to follow False Consolidation Breakouts and periods of sideways movements. There was a Pennant setup on the left-hand-side of the chart that attempted to break long to continue the uptrend, but this was short-lived, giving way to the Range setup that we now see. These two Consolidations side by side then created a type of plateau which normally means that the momentum of the trend has been exhausted. If we add a break of a Trend Line into the mix, then a trend change is the inevitable outcome.

DAILY CHART

Once this bearish trend gets going, the target that is expected to be hit in the short-term is the 0,9000 area. This coincides with the Breakout Equivalent of the Range and is the price point at which the breakouts from Consolidations come to an end.

DAILY CHART

So long as the signals and setups on the Daily and 4 Hour Charts are strong, we can capture a large part of this expected 300- Pip decline.

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____________________________________________________

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____________________________________________________

US$120.00

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 ___________________________________________

Duane Shepherd 

(M.Sc. Economics, B.Sc. Management and Economics)

Currency Analyst/Trader

Contact: shepherdduane@gmail.com

Twitter: @WorldWide876

Facebook: DRFXTRADING 

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