Clear trend, medium to long term strategy.

FX:USDCAD   U.S. Dollar / Canadian Dollar
184 0 3
* Fundamentally:
Canada is a major producer of oil             and other metal commodities mainly gold             . With the turmoil in commodity markets, Canada has been widely affected; to hedge against such an uncertain exposure, they were forced to cut interest rates and by that devalue its currency. The US is Canada's biggest exporter and economic performance in the U.S. has a strong effect on Canadian markets. With the Fed poised to raise interest rates, and the Canadian central bank is more poised toward devaluing its currency, we believe that the selling pressure on the CAD will continue, and the trend will stay strong.

Trend Bias
On the weekly chart and daily charts , the 200 moving average is acting as a very strong support level , and prices are trading above it in a clean bull trend. Prices are also trading above the 50 day moving average, which acts as a strong support for the shorter term, suggesting further bullish bias.

The black trend line , has historically proved to be a strong area, where retracements are rejected. For all the above reasons, our bias on this pair is bullish .

Major Pivots
Looking at the double tops of Jan and March 2015; prices were rejected twice at the 1.2800 level or the rectangle shadowed area. This area is considered to be a strong pivot area which acted as a vital resistance, and then a vital support area . Once these major pivots are created, prices tend to consolidate and if broken prices soar.

This major resistance area was broken in July of 2015, followed by a small retrace to re-test for further confirmation, but prices continued to ride the bull trend.

I tend to buy at pullbacks, and mainly a portion at the 23% retracement, another at the 38% and finally at 61%, with the lowest volume for the first retracement, bigger volume at the second, and the largest at the last. I already bought this pair at 1.300 and already couple of pips up, but waiting to compound and take on more positions in the next pullback.

According to historical pivots and historical patterns appearing in the Weekly chart, I believe that the next major pivot will exist at 1.40 price, if we broke this area we might consider the next round levels at 1.50 or 1.60 in the long term.

Stop Losses
I usually set my stop loss 3% below my position open price. and with my risk management spreadsheet, I trend to minimize risk as much as possible by taking other alternative positions that has an inverse correlation or as known as currency correlation hedging. This is usually good at uncertain prices like the ones we are currently experiencing.

Enjoy your trade.

Hussein Ahmed
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