IFC Markets - Analytics

    IFC Markets

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    Technical Analysis USDCAD : 2015-01-02

    Two strategies

    Here we consider USD/CAD currency pair on the H4 chart. The price is drifting within the limits of the channel 1.15587-1.16999. The downward triangle breakout appeared to be false: it confirms the efficacy of average return strategy in the given situation. DonchianChannel has also showed false consolidation. There is no contradiction on the part of the RSI-Bars oscillator: a sustainable sideways movement has been established over the last two weeks, and at the moment the oscillator bar is near the local overbought level. The price channel is proposed to be divided into three equal areas and two pending orders are to be placed: Buy Limit at 1.16058 and Sell Limit at 1.16532. The division into three areas allows keeping the profit/loss ratio at the level of 2:1. In this case Stop Loss may be placed on the opposite channel side, and Take profit is placed at the opposite area boundary. We also accept the possible volatility momentum on the market due to the ISM Manufacturing PMI release at 16:00 CET. Therefore, the breakout strategy may be used as well: pending buy stop/sell stop orders are placed at the channel boundaries with Stop Loss opened at the opposite side. Take profit is not placed in this case. Subsequently, no matter which movement is chosen by the market (average return or trend-following), we wouldn’t miss this movement.

    EUR/USD

    In case of the channel breakout, after the position opening, Stop Loss is to be moved after the Parabolic values, near the next fractal high/low. Updating is enough to be done every day after a new Bill Williams fractal formation (5 candlesticks). Thus, we are changing the probable profit/loss ratio to the breakeven point.

    Buy Limit above 1.16058
    Stop Loss below 1.15587
    Take Profit below 1.16532
    Sell Limit below 1.16532
    Stop Loss above 1.16999
    Take Profit above 1.16058
    Buy Stop above 1.16999
    Stop Loss below 1.15587
    Sell Stop below 1.15587
    Stop Loss above 1.16999
    Dear traders. For the detailed report of the strategy based on analytical issues of technical analysis click here.

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