Stock Market

USDCAD Very Strange Set-up for OANDA:USDCAD by xAverageJoex


  • Odd stuff goin on…

  • Just buy at 1 (Red Line Green Dashed Line), 2 (Next Redline Blue Dotted Trend), or 3 (Last Blue Dotted Trend Line , Last Red Dashed Sub Level), with 38 pip set stops at each one…

  • 12-19 R trade using green “Profit” Line as target…

Long Form Description & Explanation:

I have been staring at this chart all day, and until about an hour ago, it made no sense. I started applying a theory I have been using very effectively with the euro , that basically studies how a trend/move is only relevant to itself. Each line is the exact same angle, all parallel channels.

What’s extremely odd is what I see on the daily chart . It is making an upwards channel, which in itself is not very out of the ordinary. What is strange, is the distance between the breakout, and new lines in the consolidation between flip zone A (Future potential support, resistance in the trader eye right now) It lines up very much as if it will create the exact same channel, right on top of itself, in the same way, as it continues to climb.

If you measure the distance of the channels, they are 500-535 pips wide (very similar). The absolute peak of the last channel is the center line of the new channel. If you turn your head sideways, it looks like a sideways market behavior, as any other pair would do, just on an upward slope. only using flip zones to react from, and the angled lines are support and resistance .

In simple terms, think of the trend lines as horizontal, and the flip zones with red centerlines as you would observe a trendline, and imagine this channel was sideways. Basically flip your thinking on what each is supposed to do.

Looking to take a long trade and be a part of this oddity, around the sub zones and trend channel extreme areas. Could have an entry from either (1) (2) or (3) as the trendline. I say this because observe how the price reacted each time it crossed lines. If we follow support patterns, usually the middle touch is the deepest, with the touch before and after coming close but no cookie. With that thinking, I expect the most likely entry to come from point 2.

Despite this, because of the odd set up, I intend to just place a stop loss trade entry at each level, using set 38 pip stops. This one has a lower pip value so the stop can be rather larger than most pairs and not be as significant for the size used. I also pick the 38, because of the pairs ATR value on the 1 hour chart. This also tends to fit quite nicely with the price pattern as if the 38 pip is broken below the trend line currently, it will step down to the next. The trend lines have a range of about 90 pips, so this will allow a proper entry at each level with insane risk for the attempts, as the stop from the first entry would have to be about 70 pips off entry to not try from any other point, and stacking in will be unnecessarily risky, because we are in the middle of a range market condition looking at it like normal. Still, this would be the better place to buy over sell, but mind the distance to the next flip zone (C) It is almost 350 pips away. If All entries get stopped out, there’s 250 pips left to the bottom.

If this does continue, as peculiar as it is, I will use the green line as a guide for taking profits, as it is the beginning of the extreme of the channel, should this be a new channel forming. Ultimately I’m targeting the 1.40-41 range in the end. Depending on the entry we get, the R for the opportunity will range from 12-19 R, a fairly large one. This trade may take time, but I believe what I see will play out similar above the older channel. It is about the only thing that makes sense, with the violent actions up then down, but strange repetition of holding trend lines as strong support over zones.

Most likely outcome is a response from point 1, the extrem line of the previous zone. This is also a flip zone, just in trend line form, and lines 2 &3 are just overlap of extreme buffer zones(where range buyers and sellers are congregating) If 1 does not work, 2 is a possibility just because pattern, but worst case I expect 3 to hold in the end and then turn upwards. I don’t think we will make it to flip zone c right now, but it is also likely just a normal market expectation or behavior.

Entries with stops will be used.

Large inverted hammer off the flip zone B adds to the idea the flip zone redline at the trend line is a great entry point for this.

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