While cyclicity on the daily timeframe on EURCAD may appear in an uptrend when viewed over the past six months (since August 2012), the weekly tells us another story; that we are still in a protracted downward trend over all. We can thus dismiss the upward trending cyclicity for the last six months as being nothing other than merely complex retracement.

Friday’s bearish pin bar reversal has simply given us an opportunity to short this cross pair in advance of a potential continuation to the downside, and we have a confluence of reasons in support of our decision to trade at the break of Friday’s low.

Not only do we have the bearish pin bar (high test) rejecting a soft level of resistance, which has spanned back since 2010, wealso have bearish RSI divergence. Furthermore, our entry below Friday’s lowwill coincide with the break of a head and shoulders pattern on the hourly to ensure a ‘safer’ entry compared to if the hourly cyclicity was still making decisive ‘higher peaks and higher troughs’.

If we are triggered within 24 hours of placing the trade, wewill trail for every second seller bar and see how price action reacts totechnical obstacles in the way, such as the 1.3000 psychological number of support. If the trade does hit our desired high reward/lower probability target, just in advance of the previous meaningful swing low at: 12180, then we have atrade with a 12:1 reward to risk potential.

If we do not get triggered into the trade within 24 hours, we can remove our order, safe in the knowledge that our rules and parameters have kept us out of a market which is not ‘playing ball’...and we can contently preserve our capital, until the next technically sound opportunity manifests itself.

Either way, it’s a trade worth taking!

Reasons for:

Bearish pin bar reversal

Reversal on hourly timeframe

Rejecting a soft level of resistance

Soft level overlaps with 0.50 Fibonacci retracement level

With the weekly trend

RSI Divergence

Daily Chart


Weekly Chart