Daily Price Action
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Price Action Setups – USDCAD Setting the Stage for a Move?

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One pair I’ve been watching for a while is USDCAD. The pair provided a lot of price action setups late last year, but for the past few months it has consolidated into this bullish wedge pattern.

The wedge was broken on May 20th and I figured we would see a move higher. Instead the pair has moved lower and is now resting on the upper boundary of the former wedge along with near-term support at 1.085.

Although there’s no price action strategy present, today’s rejection of this support level makes a strong case for a move higher to retest the key level at 1.094 in the coming days. Tomorrow should tell the full story.

audjpy forex daily chart

We’ve been following AUDJPY ever since the trend line break on May 16th. The market is now testing the underside of former support (now resistance) at 94.56.

A bearish pin bar at this level would make for an ideal setup. The risk to reward ratio from this level would also be appealing. We’ll have to wait and see what tomorrow brings.

audjpy forex daily chart

I posted yesterday that the next level of resistance for USDCHF should come in around .8985. Price came close to this level today before closing lower.

Even if we were to get a bullish signal at current levels, the market is too extended at this point to justify an entry. I’ll be waiting on the sidelines to see if the market retraces to .8920 or even .8850 in the coming days and weeks.

audjpy forex daily chart

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7 comments
Lloyd says

Really like your explanation of what’s going on in the market. Came across your site earlier this week. Would you recommend trading on the USD/CAD or wait for further price action confirmation? Thanks!

Reply
    Justin Bennett says

    Hi Lloyd, thanks for the positive feedback. I’m glad you’re enjoying the content.

    As for USDCAD, you could really play it two ways. The more aggressive way would be to enter now with a stop below yesterday’s low around 1.0830. The less aggressive way would be to wait for a break and close above the trend line I have drawn in the chart below.

    Which one you choose really just depends on your tolerance for risk as well as your trading plan. For me personally, I’d like to see a true pin bar at this level to signal that a long entry is worth the risk. Otherwise I think there are better pairs to trade right now, like AUDJPY which just broke trend line support again on the 4 hour…

    Reply
      Lloyd says

      Thanks for your feedback. I like how you approach this. In my limited exposure to all this, you are definitely one of the more helpful ones that I have come across.

      Reply
        Justin Bennett says

        Any time! I’m always happy to answer questions.

        USDCAD is starting to put a lot of pressure on that upper trend line. The bullish pin bar on the 1 hour has me thinking that a break to the upside may be in the works. We’ll see…

        Reply
      Justin Bennett says

      There’s that break of the upper trend line on the 4 hour chart…

      Reply
        Lloyd says

        So, would you wait for a clear price action signal once it has crossed the trend line or place a trade on the cross?

        Reply
          Justin Bennett says

          If I ever play a break like this without price action I always wait for a pullback to get a better risk to reward ratio. Having said that we have already seen the market pullback some from the daily close at 1.0873.

          If you draw support on the 1 hour chart at 1.0872 you’ll see why the market is currently holding where it is. This level may hold or we may see a further pullback to 1.0865 before a possible move higher.

          Reply
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