USDCAD Multiple Time Frame Analysis

Following accumulation between 2007 to 2013 we have popped to the 2016 highs of 1.463 where we met resistance at a significant level.

PA then dropped to back-test the 1.21847 to 1.25890 area.

USDCAD 12-month time frame

Natural progression would suggest we rally back up to test 1.43210 and assuming continued bullish momentum, break through on the second attempt.

There is still a long way to go however, and current price action is unclear on the higher time frames.

USDCAD 3-month time frame

EURUSD Opportunities For The Week Ahead

EURUSD weekly has recently hit a significant level at 1.08734 which caused the pop to 1.11813.

EURUSD weekly time frame

After distributing and making a double top on 21st Oct – 5th Nov, we headed back down to test 1.09994.

EURUSD 4-hour time frame

We are nowin the process of back-testing 1.10729. This week I will be looking for short scalps on lower time frames between 1.10770 and 1.10822.

AUDUSD Dropping Fast

Following on from my general higher time frame analysis PA has been very bearish over the last few days and we are now close to testing the key level of 0.66740 – 0.67480 once again.

AUDUSD 3-month time frame

We should get some buyers / profit takers at this level assuming lower time frame PA displays slowing of momentum.

AUDUSD 4-hour time frame

The shaded box shows the area of congestion we should be targeting. 0.67435 could be a nice area to look for long scalps. 0.67234 is our invalidation level.

It’s key to observe momentum as we approach this area, as technically it is our second touch on the higher time frames so we can smash straight through.

Weekly time frames show a strong bearish trend, so any long scalps here would be against the trend and should have appropriate expectations.

Trade #4: Time To Seek BitMex Alternative?

Last week my long orders were triggered at 8755 on BTC.

XBTUSD 1-week time frame

I expected a reaction as we approached the weekly doji at 8750. This level also lined up with some lower time frame levels on the leg we are retracing.

XBTUSD 15-min time frame level origins

I entered at 8755 with 400, my first target was to sell 300 at 8900 and then let the final 100 run with a tighter stop loss.

XBTUSD 15-min time frame orders
BitMex trade report

Overall a small profit of 0.00033995 BTC. But the frustration here is the slippage on the stop order. It also happened on my previous BitMex trade. Yet never any slippage on my take profit order?

I’ve heard bad things about BitMex but always found it does the job for me. Perhaps I will start to look for alternative exchanges after this.

Lessons

Entry was good, if I was in front of my screen I would have been able to let it run more before taking profits, as the price smashed through my target. Also maybe I could have had my stop loss tighter.

But overall profit is profit, relatively happy with this trade.

Trade #3: Prolonged EURUSD Scalp

Lots of discussion points on this one. Lets start by looking at the daily chart set up.

6E 1-day time frame

The main focus here is the solid cyan line at 1.10560. This level has strong significance, not only being a previous swing-high, but also has importance on lower time frames. The red level is our primary invalidation point. The highlighted yellow box shows the daily candle which made the low in the leg we are retracing.

The following chart shows the shaded yellow area in a lower time frame.

6E 1600-tick time frame

You can see further significance of the 1.10560 to 1.10580 level (the cyan lines). This was the first support gained on the up leg that we are retracing, and was untested in our current move.

Even though we were dropping with lots of bearish momentum, I decided to target this area for a long scalp and entered an order for 2 contracts at 1.10570. The plan was to take profits on 1 contract at the first possible lower time frame level and let the other half run. It didn’t quite go according to plan.

6E 1600-tick time frame current price action

First thing to note, is that we didn’t respect 1.10560 as expected. Crashing through to 1.10500. Not a good way to start a lower time frame scalp. I immediately started scrambling for the significance of 1.10500 but couldn’t really find much (marked on the yellow-box chart earlier).

I decided to check the underlying EURUSD spot chart to see if this gave me any clues.

EURUSD 1-day time frame
EURUSD 15-min time frame leg start area

The first thing I noticed was that the highly relevant cyan level on the 6E chart had no real significance on the spot chart. As we were hitting the cyan level on 6E, the underlying was hitting 1.10282 (purple level above). This was technically the high of the 15-min candle which produced our low. But it’s not really something I would want to trade given the context. Luckily we had a more significant daily level at 1.10255 which was getting more respect on the spot chart.

EURUSD 15-min time frame current price action

What About The Trade?

Well due to my less than perfect entry, this quick 10-minute scalp had suffered significant drawdown and lasted 2 hours. I did manage to close the position for a small profit. Due to my poor entry, and news soon to be released (and potential volatility) I exited the whole position at the first chance I got to minimise my risk.

M6E 133-tick time frame showing trade
Ninja Trader Performance Chart

Lessons

Underlying spot levels are more important than derivative levels! I should always check both charts when identifying levels of significance, and to give a stronger weight to the spot charts.

I am happy with the way I reacted during my trade. I knew my entry wasn’t ideal and I gained further information during the trade (spot level was off) so knew that it wasn’t the time to try for a runner. The exit position was as good as I could have wished for, I didn’t want to be in the position where I take more draw down in the hope of a reversal lower.

A Good Level Beats MACD Divergence All Day

This morning I’ve been looking for scalping opportunities on the lower time frame EURUSD chart. I’ve reinforced my opinion that the number one priority when looking for trades is identifying significant levels. The MACD is at best a lagging indication tool for momentum change, and at worse can actually hamper your trading decisions by creating doubt and distraction to what really matters.

EURUSD 4-hour time frame

A reminder of where we are on the EURUSD. After making a double top at our local high on 4th November we’ve dropped and tested 1.10628. This level is our 2-weekly swing high of our significant recent low. It also has clear significance on this 4-hour chart being the swing-high of our down-leg which made the local low of 1.09913.

I am expecting price action to drop further and start testing levels in the yellow shaded box and hit a more precise leg-start.

But for now I’m looking for more local scalping opportunities around current price action.

EURUSD 15-min time frame

In the above chart I have highlighted the 15-min candle which made our low. The final leg down is marked with the purple arrow.

This is all basic stuff and was draw out on 6-Nov 12:45 (prior to white vertical line).

At this stage I am not certain where we get our reaction, or indeed what is the ‘true’ leg start (swing-high before our low). I usually plot a couple of options (the green marked lines) and observe price action as we approach each area of interest looking for clues such as patterns or divergences.

Another way to identify our ‘true’ leg start is to seek higher time frame confluence.

EURUSD 1-day time frame confluence

Here we can see a highly significant area of congestion on the daily chart (yellow circle). I have plotted 3 purple levels from the area. We can now return to the 15-min chart to see how they line up.

It’s amazing how precise the higher time frame purple levels match our local green level. They are basically the same (1.10802, 1.10801, 1.10800). This tells me that the first time we hit 1.10801 we should get a significant reaction. Remember this analysis was done prior to 12:45 (vertical line).

One thing to note, why not consider 1.10753 as our significant level? We could have probably found higher time frame confluence here also. The simple answer, which one do we hit first? We are playing first-touches, so although both levels are important, we play the one we hit first, only on first-touch. 1.10753 may still be significant in the future as it remains untested, but for now we play what is next.

You can already see the reaction we got as we tested this level. But that of course is hindsight. Lets discuss a couple more important points about this setup and reaction.

Firstly, getting a perfect entry is near impossible. We have identified a 15-min level (lets call it) that we are happy with, but you will notice we actually wicked quite significantly down to 1.10773. When scalping lower time frames every point is important. How could we have been more precise? We can look for lower time frame levels. This wick down would have hit something in the low tick charts. So where do we put our entry? To be honest I was happy to take a 3-point draw down. Our stop-loss was never under threat, at the 1.10723 level (slightly different on 6E futures chart, but the equivalent level).

Second and most importanty…

Why Didn’t I Take The Trade?

MACD is the reason. I had everything plotted, a nice tight stop-loss, check. A significant level with higher time frame confluence, check. Lower time frame progression, check (trending upwards, testing previous highs). Everything was making sense.

I even entered and removed my orders from the DOM 3 times!

Ninja Trader cancelled orders report

This clearly shows hesitation from 12:46 to 13:08 as I enter and remove my buy-limit and stop-market orders. The bottom 2 cancelled orders were lower levels I wanted to buy at incase we dropped further, but I had well and truely missed the boat by then.

Here is the 6E chart I was using on Ninja Trader to identify my levels (slightly different prices, but equivalent levels which all had higher time frame confluence like the spot-price).

6E 15-min time frame on Ninja Trader

So, back to the MACD and the ultimate reason for cancelling my entry 3 times. I was waiting for MACD divergence on at least the 133-tick chart or even 1-minute chart. But it never came, prior to the pop.

6E 1-min time frame showing no MACD divergence
6E 133-tick time frame showing no MACD divergence

In real-time this is pretty scary, the doubt creeps in. I mean we at least want to see some divergence on the very low time frames right? But nothing, despite everything else being perfectly set up.

One of the times I removed and re-entered my order I remember thinking to myself:

  • Ah no MACD divergence, lets just wait until we see something (remove order).
  • Wait a second, everything is perfect, I love this level so much, screw the MACD (add order).
  • Oh but we can just plummet here, absolutely no sign of a reversal, no patterns either (remove order).

The moral of the story. Levels are the single most important thing you can look at. Find a good significant level, everything else will fall into place. Even if we are dropping like a rock with no signs of slowing momentum, if the level is truely significant and makes sense, we WILL get a reaction.

EURUSD Now Bouncing?

Yesterday saw a larger-than-expected pull back on EURUSD.

EURUSD 2-week time frame

From the 2-week chart we can see the significance of 1.10628 labelled above in purple. The high of the candle that made our recent low.

EURUSD 1-day time frame

Zooming into the 1-day time frame I have highlighted the congested area that I expect price to fall to if we break the current support. Within this yellow box there will be several leg start candidates that we can play scalps off. As always, the red level of 1.09913 indicates invalidation of our trend and therefore provides an ultimate stop-loss price.

EURUSD 4-hour time frame

As we observe lower time frames more levels begin to appear. 1.10270 is technically the 4-hour leg start and should get a reaction if we come that low. We can also see no reversal patterns on the 4-hour. Of course there is no rule to say we must have one, but the slowing of bearish momentum in the lower time frames, offsetting higher time frames, usually produces at least a double-bottom.

We must also consider the higher time frame analysis and remember targets of 1.12155 above could be what we are aiming for, before the big dump lower.

Trade #2: Quick M6E Long Scalp

I’m still expecting a EURUSD to push higher either this week or next. I think 1.11230 needs to be tested on the monthly time frame. But it’s important to not form a bias around this.

EURUSD 1-hour time frame

I’ve marked quite a few levels where long scalps are possible as we retrace the up-leg. The red level at 1.10729 is our first invalidation of higher time frame trend.

This trade did not go to plan, but managed to salvage a small profit. I had originally wanted to scalp long with 2 micro futures contracts (M6E) at 1.1129. First target was 1.1132, then move stop to break-even and let it run.

My entry was good. I targeted the 15-min level and got a nice reaction. I took profits as planned at 1.1132 and moved my stop loss to break even. This is when I realised there was some news coming out in just 3 minutes which can cause volatility. I also noticed there was no bullish follow through at this level so decided to take second profits at 1.1133 and close the trade.

I trade on M6E but chart the 6E as it’s smoother with more volume. I also look at the underlying EURUSD chart above to help identify key levels.

6E 133-tick time frame: Green circle bought 2 contracts, Red circles closed 1 contract

The origin of 1.11290 can be found by looking left at the leg we are retracing down. It is a swing-high of our low.

6E 512-tick time frame showing origin of 1.11290 level we traded
Ninja Trader Trade Performance Chart

Lessons

I have gained some confidence in my quick decision making skills. This clearly didn’t want to push higher and given the potential incoming volatility it was a good decision to close the trade early.

The entry and exit couldn’t have been more precise which also gives me confidence in my level identification ability.

Perhaps wait for a more significant level before entering as I really had no margin for error here. The 1-hour EURUSD chart looked very bearish and needs some significant accumulation before reversing.

Trade #1: Bitcoin Short

Bitcoin price has been flat and with low volume for the past few days, not perfect trading conditions. But here I see a short opportunity was we approach 15-min leg start. I plan on taking 75% profits as a scalp at around 9300 and letting the rest run.

XBTUSD 15-min time frame

Easy stop-loss above swing high. Blue lines show 15-min levels. White line shows monthly level whose origin is the low of the candle which made our all time high.

5-min chart is showing negative divergence on MACD. 15-min starting to show the same, suggesting a slowing of bullish momentum.

This level has been respected in the past and on first touch should get a reaction here also.

XBTUSD 1-hour time frame

The low volume is a concern, but we seem to be in a trading range and higher time frame distribution pattern suggesting a drop to 8300 to 8700 is coming.

Update 1

My short orders are 9353 and 9362. So far I haven’t been filled. Price has come down to test 9300 so my new scalp target is now 9213.5.

XBTUSD 15-min time frame updated

Normally I would remove my short orders as the first touch has played out and there is greater risk we can progress higher on a second approach. But overall I still think we can go lower as we begin to form a double top pattern on the hourly. The stop loss is nice and close by if it doesn’t play out.

Update 2

Looks like I should have removed the orders after inital no-fill afterall.

This is the primary lesson to take away – when scalping low time frames on first touches, if we miss the initial move we should remove our orders.

Bitmex order

Overall loss of -0.00151406 XBT due to stop loss slippage (Actual stop loss was placed around 9400).

AUDUSD Intermediate Outlook: Long Scalps Soon!

8-Hour

Following on from our higher time frame analysis we can now try to follow the price action on intermediate time frames, starting with the 8-hour chart.

AUDUSD 8-hour time frame

We are starting to see signs of distribution and MACD divergence at our current level of 0.69105. This suggests we get a pull back here. But remember that higher time frames are bullish and targetting 0.7 area.

Our bullish trend is invalidated if we first drop below 0.68092, and more importantly 0.67236.

4-Hour

Trade setups are starting to appear. On the 4-hour chart 0.68208 to 0.68362 provides a long opportunity. We have a clear stop-loss at 0.68092. The level also lines up with daily candles, and is untested in our current move.

AUDUSD 4-hour potential trade opportunity