USDCAD Daily Long Entry

[pdr]

Yet another trade based on a signal without any real confluence (mental note to self: are you learning your lesson yet?) - original chart at the time of trade below.



I was looking for a break of a high of a candle which didn't take long. Entry at +5 pips above the high and Stop Loss set to -5 pips below the low of the candle. I could see a form of support, even though it had been penetrated earlier. To explain my rationale, refer to the chart below.



Again at that stage I did not take into account the RSI (Relative Strength Index) and at the time of writing this trade is still alive (if only just).

If you look below for my most recent thoughts, you can see what I am theorising. I'm thinking the bearish Red RSI Resistance line is more dominant because there are more touches of that line (in a more compressed fashion).

The bullish green RSI line was clearly done at the second touch of the bearish RSI line as price receded. It's also interesting to note how the Bullish RSI line became resistance.



I'll post an update on this trade when it completes. Targets or Stops - no interfering!

 

[pdr]

Trade Update: Trade closed at Stop Loss.



As you can see from comparing this chart and the previous chart, there was a major indecision candle, price rallied a little, then fell away taking the trade out at it's predefined stop loss (SL). The prior assumption of bearish compression rang true as we can see RSI trying to rally price, but ultimately getting rejected at the RSI 40 level.

This was clearly a mistake on my part, as the momentum going into the trade was bearish so, in fact, a counter-trend trade, but the problem was that all signs on entry were pointing to a bearish continuation.