GBPCAD Long Signal

Written by Raul Lopez on . Posted in Trades & Analysis. 26 Comments

Support and Resistance levels

Last week I did write about the GBPCAD… I was waiting for it to break the short term range it has been trading in for the last couple of weeks…

Today I’ve been getting several emails about it, because you know what, the GBPCAD already broke that range…

The most common question I got in those email is:

Should I trade the breakout of the range?

My answer is: NO.

And here is why…

When the market trades near a long term (LT) important levels (which was the case of the GBPCAD) there is a fierce battle between buyers/sellers trying to define which group is going to win.

If sellers won, the market would go down, and if the buyers won, the market would go up.

But sometimes buyers and sellers are willing to take the market a little higher/lower (i.e. breakout through the range), just to see if there are enough sellers/buyers on the other side. And this is what makes a false breakout.

So most of the time, false breakouts appear when the market trades near a LT important level.

So next time you see a short term range near a long term level, you better not trade that breakout, because most false breakouts appear right there.

Makes any sense?

Anyway… here is my plan for the GBPCAD.

GBPCAD Trading Plan

Let me show you this chart:

GBPCAD Signal

I have two possible scenarios:

  • If the GBPCAD retraces back to the support level and I get a significant candlestick pattern with upward pressure I will go long.
  • If I don’t get that pattern, but still the GBPCAD goes up, I’ll set a buy stop order to go long, 10 pips (plus spread) above the previous high, which is: 1.8111

Another possibility is that the GBPCAD goes back inside the range, in that case, I’ll have to reassess this analysis.

Your Turn

What do you think about taking breakouts?

What about the rule I use not to take breakouts when the market is trading near a LT level?
What about my trading plan for the GBPCAD?

Let me know in the comment section.

Tags: ,

Raul Lopez

I've been trading the markets for more than 15 years. I believe the best way to trade is by adapting to the market conditions. You can learn it too, join our community .
  • Craig Hantke

    Hey Raul, are you looking at AUDCHF at all?

    • Raul Lopez

      Hey Craig, yes I am… about to break that support level and venture into all time lows..

      • Craig Hantke

        You think it will go to .7345 again? the .73 zone i guess has seen action a couple times…

  • Said

    Hi Raul, good trade
    I entered previously usdcad and stopped earlier at 100 pips, gbpcad was indeed much better.
    I have a question if you don’t mind to answer: if you trade breakout such as your trade gbpcad and not care about a stop loss. if i understand with such breakout you can use very high lev ?
    or are there different type of breakout when willing to trade them ?

    i don’t trade breakout, or i trade them from early stage, i could spot a long trade on gbpcad at 1.791 and latter at 1.793 or 1.795, but if i enter it, i would leave enough room for stop loss.

    thanks in advance.

    • Raul Lopez

      Hey Said,

      What do you mean with “very high leverage”?

      From my point of view, it doesn`t matter what leverage you use when you trade breakouts, if you are using tight risk management techniques you’ll never have to worry about what kind of leverage you use…

      Do you see why I didnt take the first breakout? Because the market was trading near an important level (see the first few sentences of this article), I only took the breakout of the previous high, once I was sure that the market was trading in a clear condition.

      About SL’s, that depends on your risk profile, I dont tend to have too large SL… it varies from trade to trade and currency pairs…

      Let me know if this helps!

      • Said

        let’s suppose i’m quite sure of a breakout.
        can i use a high lev such as 1:1000 puts all in with 1pip stop loss ?
        i guess it takes much exercise to trade breakouts.

        • Raul Lopez

          There is no such thing as a “quite sure breakout”

          Put it this way, even when everything is aligned, everything is as clear as water, still, the market could move against you…

          If I knew what was going to happen, I’d risk not only my whole account, but my house and everything I have in that trade…

          Unfortunately, there is no way of knowing what is going to happen, for that reason, we all have to use risk and trade management…

          Hope this helps!

          • Said

            that’s the right logic. thank you for the insight.
            i probably will take some course by you when appropriate to know about trades and their risk management.

            i just checked gbpcad and i think it would retrace below the mentioned entry. but i might be 30 % wrong.

            thank you.

  • Wojtek

    Raul, Your SL 1.80233 was spot on. For some reason I picked 1.805 and hit it this morning 7.57 GMT and then it shoot off! Rotten luck! I think you must have escaped your 1.80233 by 2 or 3 pips.

    • Raul Lopez

      Hey Wojtek, did you reenter after the breakout of the previous high as I pointed out in the analysis above? Pls let me know.

      • Wojtek

        Yes unfortunately I lost twice my first trade was BUY on 21 Jan @ 10:20 with SL=1.80725. After loosing that I went long again on 21 Jan @ 13:25 (all GMT) with SL=1.805 and lost again as I said above …

        • Raul Lopez

          Hey Wojtek, dont worry about it, those things happen… You’ll get more opportunities.

          Good luck!

  • Adrian Friday

    I’m still in!!! Moved my SL to break even. Thinking about taking a couple lots off the table.

    • Raul Lopez

      Congrats Adrian, how many pips you’ve got in your favor so far?

      • Adrian Friday

        I’m at 380 pips right now. Watching the new SF box form. Moved my SL to 1.83870.

        • Raul Lopez

          You are right, it is ranging and it would be a good idea to move the SL level below that range!

          good luck Adrian!

          • Adrian Friday

            Stopped out with 275 pips profit. That was a pretty good run.

  • Tania

    1.811 is the high, so I have my buy stop entry 10pips + spread above this

    • Raul Lopez

      That’s correct Tania! Are you still holding this trade?

      • Tania

        Yes I’m still in up 270pips. As it’s a new high am going to trail my stop but not sure by how many pips? and I will look for new opportunities to add to my trade if makes a new range and trade the break

        • Raul Lopez

          Wow! Congrats Tania… we’ll have to wait for the GBPCAD to form a new range so we know exactly by how many pips we need to trail it… And if we get a new opportunity, we’ll have to take it :)

          • Tania

            I ended up closing this trade at 1.85421 for 316pip profit :) seems a good decision as its since fallen 270pips…

  • Adrian Friday

    Thanks for your insight on this trade Raul. I had my buy set at 1.8111 already but totally forgot about looking for the significant pressure on the retracement. That’s why networking is so important in trading.

    • Raul Lopez

      Hey Adrian, good to see you here!

      You are right, networking is so important! You still have that trade open?

  • Waqas Khan

    So 1.811 is the first tgt?

    • Raul Lopez

      Waqas, 1.8110 + 10 pips was my entry.

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