Could There be Danger Lurking for USD/CAD Pair?
A Quick Technical Analysis Look to See What’s Under the Hood!(By Glenford S. Robinson)
The price of the USD/CAD currency pair has aggressively surpassed its moving average of 1.3070, trading at a current price of 1.3112 as of 12:40 PM, ET, November 8, 2018. The Mstardom Finance Forex Trading Strategy told us that a strong mean reversion possibility has developed, and we should be prepared to trade this opportunity if we weren’t already in the trade.
If we were already in the trade, then we would wait until our trading strategy gives us the signal to get out of the trade by taking profits. However, if we weren’t already in the trade, we would begin to clear the bushes to make way for a solid entry as a short-seller, but before we enter the trade, we would have had to wait for the perfect time to enter.
Our ideal trade entry range is between $1.3130 to $1.3187, where we will initiate a sell order. This means that anywhere within that range is a very good place to initiate a short-sell order. Remember to keep an eye on the Economic Calendar located on the Mstardom Finance Economic Calendar page to keep abreast of what economic events are scheduled for that time period that you have set aside to trade.
The events designated by 3 bulls head is the events that traders should pay the most attention to. Three bulls head means that the Forex market for that currency pair will become very volatile before, during, or shortly after the economic event occurs. A central bank president speech is one example that will cause volatility to increase dramatically.
There is a 68% to 71% chance (probability) that the USD/CAD pair price will fall within one standard unit of the pair’s moving average of 1.3070 with a 14.5% to 16% chance that price will fall below $1.3012 and another 14.5% to 16% chance that price will go above 1.3127. However, our inference refutes this idea of the USD/CAD pair going above the 1.3127 price zone by telling us that it is very unlikely that price will go above 1.3127 for any sustainable period of time, and if price does get to that level, it will be short-lived. In fact, the reason is because the closing price data of USDCAD has revealed a strong negative bias to the downside that is visible, left of the moving average line of symmetry.
There is also a 95% chance that price will fall within two standard units of the currency pair’s moving average with a 2.5% chance that price will fall outside of or below 1.2955 and another 2.5% chance that price will fall outside of 1.3184 to the right side or upside.
There is a 99.7% chance that closing price data of the USDCAD currency pair will fall within three standard units of the currency pair’s moving average with a 1.5% probability of the price falling outside of 1.2897 and a 1.5% probability of the price rising above 1.3241. It is highly unlikely however that the price will rise above 1.3241 because the closing price data is negatively biased to the left with a bias value of -1.00954, coupled with a very small positive peaked value of 3.22, which is very close to being a normal distribution environment or system. This means that there is very low volatility, which equals low risk and small profit because more risk equals more profits, but also greater losses.
By looking at the current USDCAD daily chart on November 8, 2018 @11:04 AM, ET, we can see that our predicted price action has begun to take shape. In other words, the price has begun to approach our point of trade execution. The Mstardom Finance Proprietary Forex Trading Strategy told us to initiate a sell order when the daily price gets to between $1.3220 and $1.3242. The $1.3242 price target is our hypothetical resistance zone given to us by our Forex trading strategy. At this moment in time one could play Russian Roulette and go long for a short period of time. However, this strategy is very risky.
A courageous trader might be able to get away with trading the USDCAD pair that way simply because our Forex Trading Strategy told us that the USDCAD pair is currently exhibiting a very low dose of volatility. In an instant, this low-level volatility environment (of volatility less than one) could easily become an environment with a volatility greater than 4 to the upside, inducing upward momentum volatility or to the downside, inducing downward momentum volatility if there is a positive or negative news catalyst.
The way Mstardom Finance traders handle such unpredictable news catalyst from wreaking havoc on our trading is by keeping a close eye on the Economic Calendar located on the Economic Calendar page on Mstardom Finance. We pay the most attention to the upcoming events that is designated with three (3) bull heads.
Disclosure: I/We/Mstardom Finance do not own a position in the USD/CAD currency pair.
Disclaimer: ©Mstadom, Inc., Mstardom.com, Mstardom Finance does not provide investment advice.
Mr. Glenford S. Robinson is the Chief Executive Officer and Founder of Mstardom Finance. He is the editor-in-chief of News and Magazine article publishing. Mr. Robinson is also the lead developer of the Mstardom Finance Platform at Mstardom.com. He is passionate about quantitative finance and technologies associated with that discipline, such as python-based algorithmic programing. Mr. Robinson is also a Clinical Laboratory Scientist currently practicing laboratory medicine. When Mr. Robinson is not practicing laboratory medicine, writing articles, or studying finance, he is creating mathematical and statistical modules, using quantitative approaches to identify trading opportunities in the Forex and Stock Market.