Any good trader knows that it’s not only important to admit to your mistakes but to embrace them as well. It’s the only way to truly learn from the experience. It also allows you to fully account for the risks you take in the market.
As one famous trader once said, and I’m paraphrasing here – a loss is simply the cost of tuition.
The subsequent 4 hour close above this level had me thinking breakout, and for good reason. The pair had been in an uptrend since mid May and this level had been previously respected on a 4 hour basis on two separate occasions.
However the bulls were unable to push the market higher on a retest of the broken level as new support and the pair quickly fell back to the key 1.2380 handle.
In hindsight, a daily close above the level would have been more prudent to avoid the false break on the 4 hour time frame. But then hindsight is always 20/20.
That said, the forecast was not entirely off as the pair is right back to testing trend line resistance today. USDCAD now finds itself at a crossroads between trend line resistance and the 1.2380 horizontal support level. A daily close beyond either level will be the deciding factor.
Summary: Wait for a daily close above trend line resistance and then watch for a buying opportunity on a retest as new support. Key resistance comes in at 1.2660 and 1.2800. Alternatively, a daily close below 1.2380 would expose the next key support at 1.2304.