I’ve read somewhere that if a level is tested multiple times, fewer orders are left to be filled and thus that certain level becomes weaker by each test. Here I have USDCAD on H4 time frame. It’s been tested 2 times already. I’d like to know that how can we tell if this level is still valid for entering a long position? Should we wait for test and confirmations like engulfing patterns and Quasimodo patterns etc on lower time frames in order to spot an entry? A little help would be greatly appreciated.
What you’re asking is whether the USD is going to reverse a very long downward trend. Pity you weren’t shorting it.
In today’s Covid environment, price action market sentiment is relegated to following major news events It could take an incisive fundamental event to initiate that, and IMO, only a bad Canadian economic forecast that further weakens the currency would see the USD benefitting. As it is, the USD is being hammered by all major currencies apart from AUD & NZD, and even bettered by the Mexican peso which was a nice little earner for me, yesterday.
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If I remember right, a zone is valid until price breaks through it, but look at those diminishing returns. If I wanted to trade a zone after 3 tests, I would want a strong confirmation, but by the time I got it, how much room is left for price to move?
I have some doubts about the way it’s drawn, but I never really got the hang of that to be honest.
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So what you’re suggesting is to only enter short against USD?
Not at all… That should have already happened many candles ago according to your chart which shows a substantial downtrend.
Beware of the USD. Despite all selling forecasts, it contratrended today. against GBP & EUR in the Asian markets.
I think that whether the news significantly impacts your trades depends on a lot of things. Nowadays I trade big moves over the week rather than small intraday moves. I observe so far that news rarely (but not never) impacts my technical trades. Usually the greatest impact I observe is less efficient moves from increased volatility (a bit of a guess there). Could be different for @Nooobtrader.
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I agree that big moves over a week is the way to go, and probably the most profitable long term, however - at present - it doesn’t suit my trading style. I like to wrap up everything before bedtime.
What frustrates me more than anything is the Asian market sentiments seem - more often than I would expect - to contratrend my GBP/EUR/USD technical trades until London opens. Yesterday was a typical example in Asia. All indicators pointed to a EUR/USD buy which I took, and got blown out by lunchtime. Seems from my analysis, 30% of buyers were overwhelmed by 70% sellers.
A similar occurence, the day before when my GBP/USD buying trade was destroyed by lunchtime here in Asia.
Therefore, I will avoid trading these pairs, but I’m seriously considering joining the contratrend band for a couple of hours scalping. I’ll use my experimental demo account to monitor progress.
((Sorry for the number of edits – I keep noticing things that bother me.))
Acknowledge that hindsight is 20/20, but I like to reconstruct and analyze trades. The price in the timeframe you’re describing at the 15M level happens to fit in my strategy, so I’m curious to see what would happen if I applied my strategy to your trade. A back test, I suppose… Maybe (hopefully) it helps you too. Below is the 15 minute EUR/USD charts (not sure what time frame you like to use for your intradays). The grey box extends from an hour before Tokyo open on 16-Nov-2020 to right about the time of this post.
Because I look for certain things in my strategy, a number of things stand out to me right away. One is the resistance turned support at 1.1844. Another is the double tops supported by bearish RSI divergence shown in the blue boxes. One happened close to Tokyo open, and the other happened around the time frame you were describing (“blown out around lunch time”). Those signals would have compelled me to plan a short entry if price went below the lowest low (“valley”) in the double top pattern. The evening star pattern in the second top and a bearish confirmation would also be a valid entry if I were going purely on price action. Although I wouldn’t know if resistance would turn support, it seems to me like a logical price target, so per my strategy, I would likely set my TP several pips above that level in anticipation of that happening. In this case, it would probably work out. For the second one, I might use the low from the first short. Something like that, anyway…
News is certainly something to beware of for these tiny 14-25 pip trades. However, I didn’t see any noticeable extremes reflecting “emotional” trading or any major news EUR, GBP, or USD releases in the Asian session yesterday, so I personally would not assign causality to the news for the first one. The second one during the London/NY overlap (around 0500-0800) shows a couple of spikes which could be correlated to some USD releases, but that wouldn’t have impacted the short entry I described above (I wouldn’t know that entering, but I probably wouldn’t care all that much). Anyway – as you see, how the news impacts the trade depends on quite a bit… I could see entering bullish on that engulfing candle only to get whipsawed. But keep in mind this is also happening in a strong resistance area on the Daily chart, so I’m not entirely surprised by the moves here.
Maybe that’s useless, I don’t know. Was fun for me anyway… 
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Hey why don’t you demo trade and see? Also, with the discussion going on the thread, I’m sure you’d have got the solution by now.