forex-scalping.com

Trendline break and retest on M1 at the NY open on USDCAD

I trade this a lot in the first hour of NY because USDCAD tends to trend cleanly for a bit then reverse. On M1 I draw a trendline across at least three touches, the more obvious the better. When price breaks it with a real candle, I wait for the retest. The entry is the pullback to the line from the other side. If it's a downtrend line that got broken to the upside, I want price to come back down to the line, hold it, and bounce. Stop goes under the pullback low. Target is the high before the trendline started to matter, or the next M5 level.

The line must be drawn honestly. I only use lines with at least three clear touches, and I don't redraw it after the break to make it fit. And I ignore breaks that happen in the first minute after a data release, since they're often just noise.

Trendline breaks are notoriously unreliable on their own, so I only take them in the direction of the M15 structure. If M15 is making lower highs, I won't buy a trendline break against it.

How I check the M15 structure quickly before the NY open. I look at the last two swing highs and swing lows on M15. If both are rising, I only take breaks of falling M1 lines to the upside, since those are pullbacks ending inside a bigger up move. If both are falling, I only take breaks of rising M1 lines to the downside. When the M15 swings are mixed, I sit out, because that is usually when trendline breaks on M1 go nowhere and reverse straight back.

On USDCAD specifically, I keep an eye on oil around the NY open. If crude is moving hard in one direction, the loonie often follows, and a trendline break against that flow is much less likely to work. I am not trading oil, just using it as a quick sanity check. When oil is flat and quiet, the pair tends to respect the technical levels better and these breaks have been a lot cleaner for me. I just glance at a crude chart for a few seconds before the session starts.

If price breaks the line but never comes back to retest it, I let it go. I used to chase those with a market order and the stop ended up far too wide, under some random candle. Skipping them means missing a few good moves, but the retest is what gives me a sensible stop. Most of the time, if the break is real and the retest never comes, there will be another setup later in the session anyway. Patience on the retest is most of the edge here.