Price as I write this blog post for you is creeping it’s way higher and potentially back into a major daily price action resistance level. This resistance level is a major level and of significance because of the recent price action and overall price action story on this chart.
As the first chart shows below; price has recently been stuck in a super obvious sideways ranging period that had price tightly contained since the start of February! Price now in the last week has just busted lower and through the low of this strong range area and closed below making a strong breakout.
This is what I was talking about with the price action story and added significance to the level. As is so often the case, price is now looking to make a quick retrace back into the old breakout area or the old support and potential new resistance area. This is super dooper common with breakouts of range areas.
Before continuing with the breakout or making the stronger secondary push, price will often make a quick retrace back into the area it has just broken out of and test the same range high or low. The mechanics behind this are simple. Price breaks out with a ton of momentum and makes a strong move in the initial move. Profit takers then want to leave the market because they have made a lot of money in the breakout and this will normally cause price to make a pull-back or retrace. Price can then often pause or retrace back into the old breakout area where it finds it’s next lot of fresh price action order flow to make the next big push and sustained move.
Obviously this is a very generic example of how it can work out, but it gives you an idea of how these moves are often formed. With this current market on the USDCAD we have price at the moment slowly moving back higher with a bullish rejection candle and an inside bar on the daily chart.
If price can move back higher and into the major daily resistance area/price flip, then it could be a solid area for traders to look for high probability short trades. Traders would need to confirm any potential trades with A+ price action trigger signals such as the ones taught in the Forex School Online Price Action Courses.
USDCAD Daily Chart
USDCAD Daily Chart
Related Forex Trading Education
– Why Every Successful Forex Trader Has a Trading Journal – Free Example Included
very true, i have set a sell limit and am looking ton set a sell stop once that level holds.