My brother and I have been trading for a short time now, 3months in practice accounts. Few books under our belts and 100s of hours of Youtube videos. We started trading and analyse trends together, and its made it much more interesting by far (get yourself a trade buddy if you don’t have one!).
We have been looking at the USD/CAD pair on the 1h time frame, and was watching the down trend with our trend lines. We noticed a head and shoulder pattern form, and was lining up for a potential downward continuation, but it pulled back. It broke our trend lines again, looking like a false brake out, but the pair just seem to be dancing around atm. If you take a look at this could you offer your opinions, and what you would of waited for. I’ll try to annotate the image best I can:
I am right with you guys on this pair, I was knocked out of a position that I thought would do well, but fortunately I had my SL moved to BE at the time it shot back up,
If you zoom out to the daily you’ll get a good overall picture, you can see this pair has been in a downtrend for a long time.
Zoom in to the 4H and it’s been respecting this trend line:
As long as price keeps respecting this pattern (which it probably won’t, lol) then a short is in the plans for me as you can see. I’ll be cancelling this order before the day is over because Friday afternoon at 5 the brokers widen their spreads, which means any SL’s or orders around the closing price could be prematurely triggered.
CAD and USD have both been strong this week which is why price is dancing around. Plus it’s Friday afternoon. So, if you go in (won’t be until the 2nd half on the trading day Monday for me as markets are generally unstable the first half or so) use a wide SL to give it room, then sit back and enjoy the ride.
I generally don’t trade intra-day but here are some basic thoughts. (forgive me but I’m basic)
At the risk of being pedantic, there is no statistical evidence that chart patterns like head-and-shoulders that were identified and assessed on D1 charts in other markets will work as reliably intra-day. I know intuitively it seems like they should work, they should be just as valid - but its only an assumption.
This H&S pattern looks too flat to be worth the trade risk. If the price rise into the pattern is small, expect only a small price fall - see the excellent thepatternsite.com online for some hard data.
USD/CAD is one of those pairs I find unrewarding, maybe as they are what I call siblings - currencies of two economies, closely linked and traded for the same objectives. The currency of the smaller economy often behaves like a sub-set of the larger, so these charts tend to be flatter and more prone to trend failure than most. Other “sibling” pairs that annoy me are AUD/NZD, EUR/CHF and EUR/GBP: also CHF/JPY and EUR/USD. Over the long term, these move less than other pairs per week, month, quarter etc. but their moves stutter and fail and disappoint at a great rate.
But thanks for your good clear post and summary of what you’re doing. Good luck.
