Let The Money Talk; Don’t Front Run
Many forex pairs have been trading in trading ranges for some time now as there is no clear trend in the market. The pairs I will show you in a while have been trading sideways or in triangle formations which can at first be frustrating but if you pause and think clearly, we should be grateful for such price patterns as they will provide a clear signal for the trend that will follow. So traders might, of course, trade shorter term trends but the big trend that will give a great Risk-reward opportunity will soon come with the breakout. So traders need to be patient.
USDCAD
I’ve been following this pair quite closely and it was in the bullish camp for a bounce towards 1.33-1.36 to complete the retracement of the decline from 1.47 to 1.2450. Price has been forming a triangle pattern with many opportunities to break above it but with also many fake breakouts. Bearish divergence signals have provided me with sell opportunities and the recent rally in Oil has helped push this pair towards 1.3060 where I closed short positions.
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Apart from the fake breakouts above 1.3250 one other reason that makes me skeptical on whether we can see a new uptrend towards 1.36 is the fact that we are below the weekly Ichimoku cloud. Despite the above bearish sign, traders should continue to be patient for a breakout above 1.3280 on a weekly basis to be more confident for a move towards 1.36. Otherwise, we should expect a move back towards the lower triangle boundary and why not a break down towards 1.20-1.15 if the lower triangle boundary is broken.
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GBPUSD
After the Brexit vote and the sharp decline from 1.50 to 1.28 price has mainly moved sideways.
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We are currently at the lower boundary of the trading range and a break below 1.29 will be a bearish signal. However, we should not ignore the bullish potential if we do not eventually break down.
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A break above the short-term trend line resistance and Ichimoku cloud at 1.31 will be a bullish reversal signal that could push the pair back to 1.35. Even 1.40-1.42 could be achieved if we break above 1.35 which is the upper trading range boundary.
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The last pair I’m focusing on is the AUDUSD. In the first short-term chart, we see the rejection at the upper triangle boundary and the pull back. In the 2nd chart, you can see the bigger picture. Again recognizing risk on different time frames shorter-term traders can take advantage of the trading range but at the same time, they will have to be aware of the potential of a breakout.
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Although I trade these pairs on a short-term basis my main focus is on their longer-term price patterns as I believe we will see a breakout and a new trend until the end of the year that could run for several months.
Thank you for taking the time to catch up on my thinking.
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