As I review the charts this morning, price has already completed the first step of a potential BRACE buy setup by breaking above two important levels of resistance. The first is yesterday’s high, represented by the light green horizontal line. The second is last week’s high, represented by the red weekly breakout zone.
For me, this immediately puts USDCAD on my buy watchlist. However, that does not mean I’m ready to enter a trade yet.
There are still important pieces of the setup that need to develop before I consider putting capital at risk.
Understanding the Markings on My Chart
For those who are newer to my analysis, here’s a quick explanation of the levels I use on my charts.
The light green horizontal lines represent the previous day’s high and low on the 1-hour timeframe.
The red box represents last week’s high.
The green box represents last week’s low, although it is currently below price and not visible on this chart.
The blue horizontal line represents the previous month’s high or low, which I mark from the Daily timeframe.
These levels help me quickly identify areas where price may react and where higher-probability trading opportunities can develop throughout the week.
What Is a BRACE Setup?
For those who are new to my trading methodology, BRACE is the primary framework I use to identify high-probability opportunities.
BRACE stands for:
Break → Retrace → Confirm → Execute/Entry
First, price must break an important level of structure.
Next, I want to see price retrace back toward that breakout area.
Once price returns to the level, I need confirmation that buyers or sellers are defending it.
Only then do I execute the trade.
This process helps me avoid chasing price and allows the market to reveal its intentions before I enter.
If you’d like to learn the complete methodology and all of the rules I use before entering a trade, be sure to read my Complete BRACE Trading Guide.
The Break Has Already Happened
One of the first things I look for is evidence that the market has already chosen a direction.
USDCAD has now broken above yesterday’s high and above last week’s high.
That fulfills the Break portion of the BRACE process.
From a structural perspective, buyers have already shown their hand.
The market has demonstrated enough strength to push through multiple resistance levels, which keeps my bias pointed toward the upside.
However, a breakout by itself is not a trade.
This is where patience becomes one of the most important trading skills.
Now I Need the Retrace
At the moment, price is extended from the breakout zone.
Could it continue higher from here?
Absolutely.
But that doesn’t automatically create a quality entry.
Rather than chasing the move, I want to see price pull back toward the area it just broke.
Specifically, I will be watching how price behaves around:
- Yesterday’s High
- Last Week’s High
Since both levels are clustered together, they create an attractive decision zone where buyers may step back into the market.
This retracement is what fulfills the Retrace portion of the BRACE process.
Confirmation Is Non-Negotiable
This is where many traders get themselves into trouble.
A retracement alone is not a buy signal.
I still need confirmation.
Once price pulls back into the breakout zone, I want to see a bullish candle form and, more importantly, close bullish.
That bullish close tells me buyers are actively defending the level.
Only after that confirmation candle closes will I consider entering a buy position on the following candle.
This fulfills the Confirm and Execute portions of the BRACE process.
The goal is never to predict.
The goal is to let the market provide evidence first.
My Plan for USDCAD This Week
Here’s exactly what I need to see before considering a buy:
- Price remains above the breakout zone.
- Price retraces back toward yesterday’s high and last week’s high.
- Buyers defend the breakout area.
- A bullish confirmation candle forms and closes bullish.
- I execute a buy on the very next candle.
If those conditions develop, USDCAD could provide a high-probability BRACE buy opportunity.
If they do not, I simply move on and wait for the next setup.
There will always be another trade.
Final Thoughts
For now, USDCAD remains firmly on my buy watchlist.
The Break portion of the BRACE setup has already been completed with price moving above both yesterday’s high and last week’s high.
What I need now is a retracement back into the breakout area followed by a bullish confirmation candle.
If those conditions develop, I’ll be looking to execute a buy position on the next candle.
Until then, patience remains the trade.
The market has already shown me where it wants to go. Now I’m simply waiting for it to provide the retracement and confirmation that BRACE requires before putting capital at risk.
