I'm going to post two weekly charts. The first one is just to remember the basics of technical analysis and the second one with recent price action.
Why everybody needs to complicate or overcomplicate things? Why would I want that? The truth is people forget pretty soon, almost everything. Think a moment about it and try to remember the news you see on tv or read on a newspaper a few weeks ago; do you remember that? Maybe for a couple of days was relevant, but then, even if is still relevant, no one remembers. I've read about this issue applied to trading and seems to be more important on stocks and commodities, even though the concept prevails.
Back to the basics. How we can define a trend? Higher highs and higher lows would be an uptrend, lower highs and lower lows would be a downtrend. Plain black and white. How to know in advance what's going to happen? NO ONE KNOWS!
Above is the weekly chart for the usdcad but in this one I've included data since 2001. This picture is just to remember what has happened with this instrument and moreover what's happening nowadays. Price has been in a downtrend for around six years, making lower highs and lower lows, but last year's high broke a previous high, making a higher high and then, in april this year, a higher low. If the march09 high is taken out, that would confirm a new uptrend in place, but if price breaks the april low and even the nov07 low, a bigger picture would suggest a continuation of a massive downtrend.
This second chart above is more close to recent price action. I am basically seeing a downtrend followed by a consolidation phase. By now price has bounced back to the range and a better option would be to stay aside from this pair till a confirmation of direction. A triangle formation is in place but a break either way could lead to a clearer picture of future price action.
Daily
Last post we spot a reversal candlestick pattern. Now we can says it was valid due price went straight up, back inside the range. A little bit late, though.
By now this chart looks awful to me. Too congested and volatile to trade. While inside a range, price could do whatever it likes. A test of the upper channel trend line is possible, and a break to the upside would suggest further movement in that direction. Within last two weeks, price has formed a few inside bars with false breakouts and then more inside bars with other false breaks, so my advice would be, stay on the fence.
Price is trading below the 120 and 200sma, but the two are almost flat, although providing resistance. Stochastics has showed a bearish crossover suggesting a possible movement to the downside.
4H
This chart is amusing to analyze. From my last post, I've failed. We had a few confluences suggesting a continuation of the downtrend and a possible retest of the previous low formed recently. I've labeled this with red as FAIL. We made that assumption based in a few confluences around that zone. Price stalled at a fib retracement, near the apex of a previous triangle formation and stochastics showed a bearish crossover.
Next bar of the chart showed a gap up on price with a bullish candle that should sign as a major warning. Price just took off to the upside, breaking previous support/resistance zones, without hesitation. Price didn't show any sign of resistance within the 1.0180/83 zone, but bounced down from the daily chart trend line just to catch some breath and continue higher.
It is curious how the first triangle formation seems to be still valid. Price found resistance in the projection of the lower line of the triangle, and by now has defined a downtrend channel. What I found weird is that this new channel has almost the exact direction of the upper line of the triangle (in blue). Also weird that the direction of the lower line of the triangle has provided some support in the last bar of the chart (in red). That might be just coincidence.
The main knowledge earned here is that higher timeframes are more reliable than shorter ones, and indicators are just worthless.
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