I will be looking to short AUDCAD because of the underlying fundamentals between the two countries have been pushing prices lower over the past year. We are approaching a strong zone of resistance and AUDCAD has been trending downward in a nice channel. When price gets into the zone it will provide a good opportunity to make a 3x return vs the risk. In the short term I will be sitting on my hands and waiting for this setup to qualify for a trade.
In Forex trading as with any other type of investing and or trading we should always be looking for a reason to take a trade and not just placing trades all willnilly like! Trading for no good reason is a sure fire way to blow out your account. With that being said I am providing my view point and analysis of certain Forex pairs and where I believe potential trading opportunities exist. Nothing in the Forex market is 100% so you should always look for a valid reason to trade and then weigh the potential risk vs the reward. Below I have outlined my process for taking a trade and what qualifies as an acceptable risk vs reward setup for me personally.
1. A underlying Fundamental Reason to trade one direction or the other.
2. Technical support on your chart and time frame to support your overall fundamental reason for trading.
3. A 3 to 1 reward to risk ratio. Does the setup provide and have room to give you a 3x reward to 1x risk.
If I can answer yes to all three questions above then I will take a trade it’s as simple as that. I hope this helps. Remember!!! Plan your trade and trade your plan.