The EURCAD has started to wind up and has now formed an inside bar (IB) with the daily charts candle having the low and high being fully contained within the previous candle. Price has been roaring higher on this pair since it broke out of what was a very tight ranging box area. Price had been struggling to move anywhere and as we often talk about in this blog; the longer the price struggles to break out and goes on winding up, normally the more explosive the break out is when it occurs.
The key to breaking out of the range was price closing above the old resistance. Once price broke and closed above it, price zoomed higher. After this huge move price is now consolidating. As we talk about in this strategy article HERE, one of the key patterns of the market is that price will move and then consolidate and at the moment we are seeing consolidation in this pair before price makes it’s next move.
Because price made such as strong and powerful move higher, the odds are higher that price will continue on higher after this winding up breaks out. Traders can start watching this pair for breakout trades and to get long with this strong momentum. If price does make a break lower the major support is the old resistance of the break out area. This area could look to hold as a new support and could be a super area to look for long trades should price fall all the way back lower.
EURCAD Daily Chart
hi Johnathon, just curious if the 4th last candle is also an inside bar. Its the first bearish bar at the swing high. You did not label it on your diagram as and inside bar, you labeled the candle two infront of it as the inside bar in this diagram. If the candle i am talking about is not an IB could you please explain to me why to clear confusion thanks
Hello Lois,
the candle I think you are talking about, which is the first candle at the swing high is a inside bar. Read the requirements for a valid inside bar here: https://www.forexschoolonline.com//forex-strategies/page/2/
The reason I commented on the other IB is because it was the last candle to form and showing that price was most recently winding up rather than a few days past.
Safe trading,
Johnathon
Hi J.F, I am with HotForex broker.
I would like to know if HotForex is among Daily New York Close broker and they use 5 bars per week, not including Saturday & Sunday to their chart.
Best Regards/
Yes HotForex use NY close 5 day charts for their MT4 charts.
As newbie, I see that price is testing old resistance abt 1.4330 that you did not spot. Is not important to see price behavior here?