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Today we saw USDJPY break down from the wedge formation I posted yesterday. But despite the break of wedge support, this pair still looks well-supported up here.
So where is “here”?
Right now the market is consolidating between a support area of 103.74 and 104.11. Essentially this is the March 7th high and the April highs respectively.
The market formed a bullish inside bar as part of this consolidation. This inside bar does present a potential trade setup, just keep in mind that the pair has yet to post a daily close above the April highs at 104.11. This means that any long entry on a break of the mother bar does carry with it a higher level of risk.
Summary: Potential to trade today’s inside bar on a break of the mother bar high from August 26th. However a safer bet is to wait for a close above 104.11 and then look for a long entry. The next key resistance comes in at the year open around 105.30.
USDCAD presented us with a 13R trade in late July and I do think there’s still some left in the tank. One key to trading a breakout from trend line resistance like this is that you want to see the market put in a higher low from the previous low prior to the breakout. In this case that low comes in at 1.063.
The key support area in this case is 1.082, which is represented by lows in both early and late May. The level also acted as resistance on July 25th and July 28th immediately following the break of trend line resistance.
Additionally, this level happens to be right around the 50% retracement of the July low and the August highs. That makes this a great area to watch for bullish price action.
Summary: Watch for bullish price action at 1.082. Key resistance comes in at recent highs around 1.098 and 1.104.
CADCHF monthly chart
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