How To Short In A Downtrend

USDCAD has given us quite a few shorting opportunities since the start of 2016. Those who have been subscribers will be aware about of the pre-planned setups and post trade analysis I've done on this particular pair. If you're one of the new subscribers you can find some of the articles below:

Shorting The Dollar

How To Trade Short With Supply And Demand

Last week we shorted again and I'll give a brief outline of why.

The picture last week looked like this below:

2016-04-10 UC Long D1

You can find that post here if you missed it. The demand level is clearly visible marked in blue below and current price had closed with a red momo candle, very bearish. Add to that the fact that price clearly looks like it's in a downtrend with lower highs and lows with demand levels engulfed on the way down.

I mentioned that the path looked clear in the previous post and here's why. The prior low was a wick that preceded a series of green candles. Green candles only indicate profit potential for shorts and there was no clear demand until much lower. I highlighted this in the members area and we looked for shorting opportunities. Here's what happened.

After the market opened, price retraced then engulfed 15m demand with a little 15m supply level. I had a small stop of around 15 pips or so and I soon stopped out.

Price rallied again but could close higher than the previous high. It then engulfed lower and created another 15m supply so I got in again. Then this happened:

2016-04-11 UC Short M15 v02

I then trailed my stop to the closest 15m supply to lock in some profits and kept on doing so.

2016-04-11 UC Short M15 v03

Price fell a bit further then came back to kick me out before another major move.

2016-04-12 UC Short M15

The additional drop was over 100 pips which would have been great. What was important though is that I kept to my rules. Over 200 would have been nice but 100 is ok too. There will always be others so I watch and wait.

I hope you found this useful.

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  1. Fxchiq on June 2, 2016 at 13:15

    Hey Joe,
    I read this article and also saw your youtube video this February about trading short term. They are great! Thank you. You use 15 min for small time confirmation in the article and film but I saw the youtube video at 2014 and you use 5 min small timeframe confirmation as well as 15. Are you still using the 5 min confirmation or now are you just using 15min? If you are only using 15 min can you tell me why? Cheers!

    • Joe Wright on June 12, 2016 at 10:47


      At the moment I’m mainly using 15m for entry confirmation (though I sometimes look at the H1 too). You’ll notice that I’m using a trailing stop for exits now as opposed to waiting for an engulf at an opposite level a few years ago. Sometimes more pips can be had when trading the current method. Also I find when trailing behind SD, 15m is better than 5m.

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