AUD/CAD: Hidden Bullish Opportunity in Descending Channel
The AUD/CAD is currently trading within a descending channel (marked in red) on the 4-hour chart. We're approaching a crucial support level at 0.9200, which the price needs to break downwards to confirm the continuation of the current downtrend.
If 0.9200 breaks, we anticipate a move down towards the "FVG" (Fair Value Gap) highlighted in green. This FVG represents an area of price inefficiency and could act as a significant support zone.
Here's where your entry point comes in:
You've identified 0.91500 as your entry point. This suggests you're anticipating a bounce from within the FVG. This is a strategic approach, as you're essentially looking to buy low within a potential support zone.
The trade setup logic:
Entry: 0.91500 (within the FVG)
Stop Loss: Place your stop loss below the lower boundary of the FVG. This will limit your risk if the price breaks down further.
Target: 0.92750, 0.93000, or even higher, depending on the strength of the bullish move and the overall market conditions. A move to 0.92750 would represent a significant recovery from the recent downtrend. However, if the price breaks above 0.92750 with strong momentum, it could continue to rise towards 0.93000 or even higher levels. Keep an eye on the broader market trends and technical indicators to assess the potential for further upside.
Rationale: If the price enters the FVG and the candles within this zone do not close below its lower boundary, it suggests strong buying pressure. This could lead to a bullish rebound towards 0.92750.
Important Considerations:
Weekly Uptrend: Remember that the AUD/CAD is in a broader rising parallel channel on the weekly timeframe. This overall bullish bias adds confidence to the potential for an upward reversal from the FVG.
Risk Management: Always use appropriate risk management techniques, including position sizing and stop-loss orders, to protect your trading capital.
This trade setup offers a good risk-to-reward ratio, with a defined entry point, stop loss, and target. However, remember that trading involves inherent risks, and no strategy guarantees profits. Always analyze the market carefully and make informed trading decisions.
If 0.9200 breaks, we anticipate a move down towards the "FVG" (Fair Value Gap) highlighted in green. This FVG represents an area of price inefficiency and could act as a significant support zone.
Here's where your entry point comes in:
You've identified 0.91500 as your entry point. This suggests you're anticipating a bounce from within the FVG. This is a strategic approach, as you're essentially looking to buy low within a potential support zone.
The trade setup logic:
Entry: 0.91500 (within the FVG)
Stop Loss: Place your stop loss below the lower boundary of the FVG. This will limit your risk if the price breaks down further.
Target: 0.92750, 0.93000, or even higher, depending on the strength of the bullish move and the overall market conditions. A move to 0.92750 would represent a significant recovery from the recent downtrend. However, if the price breaks above 0.92750 with strong momentum, it could continue to rise towards 0.93000 or even higher levels. Keep an eye on the broader market trends and technical indicators to assess the potential for further upside.
Rationale: If the price enters the FVG and the candles within this zone do not close below its lower boundary, it suggests strong buying pressure. This could lead to a bullish rebound towards 0.92750.
Important Considerations:
Weekly Uptrend: Remember that the AUD/CAD is in a broader rising parallel channel on the weekly timeframe. This overall bullish bias adds confidence to the potential for an upward reversal from the FVG.
Risk Management: Always use appropriate risk management techniques, including position sizing and stop-loss orders, to protect your trading capital.
This trade setup offers a good risk-to-reward ratio, with a defined entry point, stop loss, and target. However, remember that trading involves inherent risks, and no strategy guarantees profits. Always analyze the market carefully and make informed trading decisions.
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