USD/CAD: “It’s never too high to buy.”

This blog doesn’t only have the purpose to inform about current developments in the trading and trendfollowing world – especially regarding articles, risk management and trading systems, but another purpose of it is actually looking at major markets and their trend situation. Should we be in a market to profit from a developing trend? Should we place an order to buy or sell or should we just stay out because the market’s nature is choppy?

usdcadmThe USD/CAD forex pair makes for a good opportunity to look for continous long entry signals in the persisting trend. This is because the monthly chart of this pair couldn’t be trending more clearly. By looking at the monthly chart you can see the moving averages are decently far away from the current price, maintaining its uptrend scenario. The FX pair broke out establishing this trend two years ago already, but there is no end of the trend in sight. The strength of this market intensified even more since the 2009 high at around 1,3250 has been broken. The monthly chart has kept on climbing ever since. The momentum follows the price’s way upwards and is at its highest point, also not indicating a trend reversals. A scenario like this dictates to the disciplined trendfollower he has to go long, and long only. Let’s see if the weekly chart has to offer any signals in trend direction.

usdcadwOn the weekly chart of the USD/CAD it immediately becomes clear that one had great opportunity all throughout the last two years to enter long and take profits in this market. The nature of this move is not choppy at all, it doesn’t keep running back into the moving averages, which represent a balance zone where the price spends around 60-70% of the time – only 30-40% of the time will the markets actually be trending. This means that the initial trendfollowing entry has always been profitable during the mentioned time period, even addon trades would have been possible during these longer-stretched uptrend moves. In a situation like this, where you can choose to analyze the chart and try to pick the top to this upmove – resulting in endless losses, you might as well stay with the current flow of the market and keep going into the same direction. Here the famous saying “It’s never too late to buy.” seems to be proving correct again. Not only did the USD/CAD rise over the last two years, it keeps going! It has now clearly broken through the highs of 2009 and seems to see the next significant resistance even further out at around 1,60. Currently trading just below 1,40, the FX pair could still have quite some way to go. The ending of Dec 2015 should be strong enough to set up some kind of continuation of this uptrend. Let’s enjoy the ride on what is already looking promising – even though we never know what we’ll get until the trade is actually closed!

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