USDCAD New week (#21 - 21 May 2007)

USDCAD New week (#21 - 21 May 2007)

This pair continues its down move taking the subsequent Bearish fractal.
It also shows a good example of invalid Bullish Divergent Bar. One of the conditions DBar has to met is acute angle during its formation. Instead we see here two parallel lines.

This is also support by the Double Bottoms break on weekly chart.

New week (#21 - 21 May 2007) EURUSD

EURUSD is ranging from Thursday taking twice the bullish Divergent Bar and hitting once the same DBar's stop loss.
On 4 hours chart and Daily chart it formed Double bottoms failing to continue down move.

From this point of view it seems more probable to continue in up direction (supported my the positive Momentum and Acceleration), while moving forces muster strength.

If trader is on the long side - tighten the stop and keep in mind that market is in the Green Zone but in the same time there are two bearish fractals to be taken.

We've got additional Buy signal from the two consecutive green AC bars. Bullish Divergent Bar is supported by 3 green AO bars - signal to add to the long side.

EURUSD - Up or Down?

As fast the rally during 11-16 May was, the distance was covered back even faster and price with almost where it started.

This fast up and down move created a small puzzle for us - which way we have to chose? On the one hand we have bearish fractal and a retracement move on the daily chart where it does not seem to be at the end. Also the most recent Bearish Fractal has been easily taken.

On the other hand we have a Bullish Divergent Bar (tonight another one was formed) supported by upward acceleration and the inability even to touch the recent bottom. The strong down impulse that took the last Bearish Fractal seems to be already out of power.

If I decide to enter the market at all I'll follow this approach:

Will take the last signal as the most valid one and will place a buy stop order ( green line ) above the high of the DBar keeping a tight stop loss ( red line ).

Another sell stop loss will be placed below the lower Bearish Fractal again with a tight stop loss.

This way wherever the market takes on I'll be in.

Of course there is a risk market to enter a range and both orders to be opened and stop loss to be taken one after the other...

Well here is a point where no one tool could help, but your own mind. Before placing the orders trader must answer the question 'Am I ready to take this loss?'

Divergent Bar on GBPJPY 4 hour chart

After drifting few days GBPJPY formed a Bulish DBar on 4 hours chart.

There are

• a nice angle between the price and red alligator's line;
• Momentum was still down on that bar;
• Acceleration however was slowing decline and turned into up direction;
• Price failed to break down the channel's bottom;

Because the move is too steep and fast stop loss might be tighten, but this depends on the style of trading everyone has.