CADJPY was very Bullish on the H4 chart last week. However, the pair seems to have found a strong level of Resistance since it has produced a Double top on the H4 chart. Today’s first two H4 candles were Bullish corrective candles. The current candle, which seems to be a Bearish candle so far, if it comes out as an H4 Bearish Engulfing Candle, then the pair might offer us a short entry later today. Let us have a look at the H4 CADJPY chart.
CADJPY Price Action Analysis – 14th May 2018
After forming the Double Top, the level of 85.530 seems to be a strong level of Resistance. It has been held by two H4 candles. If the current candle comes down and makes a breakout at the level of 85.390, then selling the pair would get us some green pips. Let us have a look at the summary of the trade…
- Sell Stop Order: 85.390
- Stop Loss: 85.530
- Take Profit: 84.900
- Validity: 72 hours
- Whenever possible, move the stop loss to the entry price and whenever you want, you can take profit anytime as long as you feel comfortable
This is an ABC pattern. The first wave is AB; the second move (the correction) is called BC. Now we are waiting for a Bearish move from the point C. This is an important trading pattern that every trader should have very good knowledge about it. Financial markets produce this pattern every now and then almost on every time frame. The risk-reward ratio is very lucrative too.
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