CAD/CHF - Ascending channel on the 4H chart
- Thread starter Tradex
- Start date
Yes, odds at least (60%) favor a successful BO south. In a bear trend a bull channel can be viewed as bear flag with continuation of the bear trend as the likely outcome. The least likely event is a BO north (40%). These things said it can break either way. If it breaks north (least likely event) then I would keep my eyes peeled for a MM north and an entry to play it. If south it can result in two legs down or one good leg then a reversal.
CAD/CHF is now 15 pips away from the (presumed) breakout line.
3 possible scenarios:
1: it will test the breakout line and resume its uptrend.
2: it will re-enter the channel and break it again later, for good.
3: it will re-enter the channel and break the other way, to the downside.
The width of that channel is 200 pips.
That means traders betting against the current (presumed) breakout can earn 400 pips (width of the channel + 200 pips measured move target) with a 50 pip stop, an 8 to 1 reward/risk ratio.
Please trade at your own risk, these are only possible scenarios, not recommendations of any kind.
3 possible scenarios:
1: it will test the breakout line and resume its uptrend.
2: it will re-enter the channel and break it again later, for good.
3: it will re-enter the channel and break the other way, to the downside.
The width of that channel is 200 pips.
That means traders betting against the current (presumed) breakout can earn 400 pips (width of the channel + 200 pips measured move target) with a 50 pip stop, an 8 to 1 reward/risk ratio.
Please trade at your own risk, these are only possible scenarios, not recommendations of any kind.
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Would the bid/ask spread be tighter if you traded CAD/USD > USD/CHF instead?
No.
I forgot to mention another possible outcome.
4: CAD/CHF resumes its uptrend without a retest of the breakout line.
These types of breakouts usually produce the strongest directional moves.
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