USDCAD Short Setup With Room to Run

·    January 3, 2019

·      January 3, 2019

·    January 3, 2019

Channels are by far my favorite way to identify opportunities.

They occur more frequently than most realize and they can offer incredibly precise entries and exits to those with enough patience.

In fact, I’m convinced that you could develop an entire trading edge around nothing but ascending and descending channels.

USDCAD has formed two such channels recently.

There is a sizeable ascending structure that extends from the April low and June high.

Then there is the smaller one that began in October.

USDCAD ascending channels on daily time frame

One of my rules for trading channels is that I never trade upside breaks of ascending patterns. The same goes for downside breaks of descending ones.

Notice how USDCAD is still holding below the larger channel resistance.

However, the pair recently broke to the upside of the smaller pattern. That type of break is more likely to be false than anything else.

Which brings us to today’s price action…

If the USDCAD closes the day below the 1.3550 area, it could set up a favorable short opportunity.

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I will personally look for an entry up around 1.3565. This is the intersection of the smaller channel top and a horizontal level that has been in place since December 24th.

Note that the pair is also in the process of carving a weekly bearish engulfing pattern.

It’s a close call, but this week’s high did extend a few pips above last week’s. It’s one more sign that the pair may have reached a top, at least in the short-term.

As for a target, I’d keep an eye on the larger channel support. That could be anywhere from 1.3000 to 1.3100 depending on the selling pressure.

USDCAD sellers will also need to get through the smaller channel support. That level will likely come in somewhere near 1.3400.

In summary, a daily close below 1.3550 would establish a short opportunity from the 1.3565 (new) resistance area with targets of 1.3400 and 1.3000/100.

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USDCAD false break above channel top

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  1. What i like is that i entered short above 1.3600 based on doji, and long tailed bar from yesterday at channel resistance. I wouldn’t have chance to do this without following this blog and remembering previous year daily/weekly set ups from Justin on USDCAD. So far so good 🙂

  2. I love this setup..I will be observant to sell USDCAD soon as explained…I also took a sell on EURNZD according to how I have learnt from the way you do your analysis.

  3. I started trading from January 2018 but I can tell so far I have found you are a genuine person/mentor I can follow. all of your forex review have a passionate explanation. thank you

  4. I really love your analysis. I expect to join your channel soon. I need some times for preparation. I only have local bank account. I am from Indonesia. Can i pay via local bank account?

  5. I regret not trusting you on this one thought you are one of those fake Forex traders but thanks for teaching me a lesson…life time membership in mind

  6. Justin, thanks, requested and you nailed it. I still can’t believe your kindness for sharing all this for free, you have a big heart.

    These diagonal levels can be quite subjective…Example…I have another channel that starts off Sept, 2017 low and Feb, 2018 low paralleled by Oct, 2017 high. If you use this channel, you will see that the high of Jun, 2018 was a false breakout and so is this last high of Dec, 2018. This agrees with your idea of never trade upward break of ascending channel and vice versa.

    But all those false breakout validates your inner channel lows. Seriously multiple channels on this pair!

    Again, thanks, you are kind!

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