USD/CAD Fade Set Up |
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With highs along 1.0141 and 1.0135, there is a ceiling in place on the intraday USD/CAD. The 30 minute time frame is in distribution which is the ideal market cycle for setting up exhaustion entries. Exhaustion entries are essentially a set up that capitalizes on existing support and/or resistance. If prices rally to the resistance, it sets up a fade or short sell off the expected exhaustion of past highs. In this case that would be a short between 1.0141 and 1.0135.
MT4 chart with Autochartist plug-in
The stop loss is tight because either prices will exhaust or I will risk being short as prices gain momentum. I keep a 10-12 pip stop for all fades UNLESS there is a key high or low like a psychological level nearby.
The other factor to consider if if prices flatten the Wave out to an accumulation cycle, the trade set up shifts to a momentum set up. So keep an eye on the Wave and make sure it is not a three o’clock angle when you are setting up the fade. A fade is ALWAYS an aggressive set up but it makes perfect sense when the market is in a sideways, volatile range and follow-through is less likely.
Filed under: Chartology
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