Technical Analysis for Pair USDCAD

Today I am going to do multiple time frame analysis for Pair USDCAD. First of quickly look at the news event. Highly Impact News for USDCAD are Nonfarm payrolls, Average Hourly Earnings m/m  from US News and Important Canadian News are Trade Balance and Unemployment Rate

First of all,  I let you know that as I am a swing trader, I have been using Weekly, Daily and  hourly chart to make a decision for long or short (Buy or Sell) , to find out the long term trend and to find out entry point and stop loss, to avoid losses.

Initially I would to look at Daily chart to make a decision.

In the above chart, I have found that price is moving higher each time. 

Just to make it clear I have marked High, Low then Higher high, higher low, higher high and possibility of Higher Low as it is base of the channel or Trend line.  Now my decision is go long, buying decision, but I have to make confirm with higher time frame. Is it really up? Let's have a look in higher time frame i.e weekly.

Now I am pretty much sure that Weekly chart is align with daily as it has started making higher high and higher low and trend line has been broken. We will closely look it at

The above chart, weekly chart, is zoomed  to find out clear price movement. We are confirmed weekly chart is making higher high and higher low. Recent Resistance, brown line, has broken and re-testing the line to confirm support. In this pair, I am using Monthly chart, just to identify significant support and resistance.

It shows that the next resistance is pretty much good distance and easily earn pips while I make decision to go long, buying decision.

Just quick review,  I have made decision by using daily chart to long. I have also confirmed with higher time frame i.e weekly and use monthly chart to find out the support and resistance in order to know how far that market will move up.

Let me quickly use Fibonacci Retracement in order to find how much % has been retraced by using Daily time frame (but it does not necessary to use in Daily Timeframe, it can use in any Time frames)

Fibonacci Retracement shows that it has almost been 50% retracement made by using recent swing low and swing high.

 Now, I jump to 1 hour chart to find out the entry point or entry level and stop loss area. I have noticed that trend line break out with high momentum ( as I am using Stochastic to find out the momentum).

I have found the point of break out and it is close above the trend line having strong momentum.

After I have confirmed, price close above trend line then I will go for long – buy USDCAD by using Stop loss 10 pips below turning candle, green circle, and point of break out, green circle. Profit taking strategy could be 1:2 Risk Reward ratio or something else that suit your personality. 

Note: this strategy can use in any time frame as

Intermediate Timeframe is for Decision 

Higher Timerframe is for Long-Term Trend

Lower Time frame is for Entry, Exit and Taking profit.

Risk Disclaimer: Trading any financial assets can be a challenging and potentially profitable opportunity for investors. However, before deciding to participate in the Financial Market, you should carefully consider your investment objectives, level of experience, and risk appetite.

Financial Market Overview

Financial Market

Financial Market is a place where trading financial instruments or securities and derivatives including equities, bond, currencies, future, option and contract for difference.

Financial Instruments

• 1.      Bond- Gilt in UK, Bund in Germany and T-note in US
• 2.       Stocks- Companies Shares
• 3.       Indices- FTSE100, FTSE250, AIM, NASDAQ, S&P500, Dow30, DAX
• 4.       Currency – Forex (foreign exchange)
• 5.       Future- derivatives (derived from underlying assets)
• 6.       Option- derivatives (derived from underlying assets)
• 7.       Commodities- Gold, Silver, Crude Oil, Wheat etc

Leverage

Leverage is an investment strategy of using borrowed money. Leverage, sometimes, refers to as gearing, is a technique involving the use of borrowed funds in the purchase of an assets.

Example of Leverage:

Let’s suppose, House price is £200,000.00

Make a down payment = £40,000.00

Mortgage = £160,000.00.

Now, because of leverage of £160,000.00 can access worth of £200,000.00 just using £40,000.00.  This is a typical example of using leverage.

Margin

Margin is the difference between the total value of Securities held in a trader’s account and the loan amount from the broker.

Buying on Margin is the act of borrowing money to buy securities.

Leverage	Capital Invested/Margin	Purchase Power	Margin Ratio
1:1	£1,000.00	£1,000.00	100%
1:10	£1,000.00	£10,000.00	10%
1:50	£1,000.00	£50,000.00	2%
1:100	£1,000.00	£100,000.00	1%
1:400	£1,000.00	£400,000.00	0.25%

 

Position Sizing

Position sizing is the “how much” part of the equation when you trade.

In order to find out the position size of any financial assets to trade, following steps

• 1.       Account Size= £10,000.00
• 2.       Account Risk= say 1% then £100
• 3.       Trade Risk (Stop Loss)

Example Tesco 
Current Share price = 250 Pence
Stop Loss = 200 Pence
Trade Risk = 250 Pence – 200 Pence = 50 Pence or £0.50

• 4.       Proper Position size =£100/£0.50= 200 Shares

It shows that we can buy 200 shares of Tesco, by risking 1% of Account using stop loss at risk of 50 Pence each share.