http://www.netpicks.com/tjgiveaway1 - YOUR FREE TRADING SYSTEM I am very interested in anything related to the CAD or the Canadian dollar since I live in Canada. Not only do I hold a USD bank account but also hold a long position(s) in the USDCAD Forex pair buying on certain types of dips. We’ve had a contraction in our economy since oil prices have tanked and Ontario, once a manufacturing powerhouse, has become the province of debt and increasing hydro rates. When there is a contraction in the economy, the Fed Banks look to interest rates thinking that will spur the economy. Today, we had a BOC rate announcement and as many of us expected, the rate was cut for the second time in 2015. Cutting rates may have the effect the central bank thinks it will but there are also two cautions as well. http://www.netpicks.com/story-of-the-usdcad-forex-chart/ - READ MORE

1. Story Of The USDCAD Forex Chart
http://www.netpicks.com/story-of-the-usdcad-forex-chart/

2. I am very interested in anything
related to the CAD or the Canadian
dollar since I live in Canada. Not only
do I hold a USD bank account but also
hold a long position(s) in the USDCAD
Forex pair buying on certain types of
dips.

3. We've had a contraction in our
economy since oil prices have tanked
and Ontario, once a manufacturing
powerhouse, has become the province
of debt and increasing hydro rates.

4. When there is a contraction in the
economy, the Fed Banks look to
interest rates thinking that will spur
the economy. Today, we had a BOC
rate announcement and as many of us
expected, the rate was cut for the
second time in 2015.

5. Cutting rates may have the effect the
central bank thinks it will but there are
also two cautions as well.

6. Canadian debt levels hit a record high
in the last quarter of 2014 and major
cities such as Toronto and Vancouver
already have housing prices that some
should be ashamed of paying for what
you actually get in terms of homes.

7. These types of cuts can just make
these problems worse as it enables
people to take on more debt cheaply.
Cheaply that is, until the rates start to
increase.

8. I've written about charts and the
stories price action and structure tell
quite a bit in the last little while.

9. This is not going to be an exception as
for the second time this year, I've
taken off some of the position, known
as scaling out, although there were
two other points that offered buying
opportunities that were taken.

10. Let's talk about the two scales because
it really hits home about watching the
chart and seeing what it says.

11. This is the weekly USDCAD Forex chart
and it's the chart for longer term
trades that I will look for clues as to
what context the market is in. This will
lead to (or not) to plays off the daily
chart.

13. A. That's different! On this weekly
chart, this candle is certainly out of the
ordinary and could be an exhaustion
that may lead to a range or a healthy
pullback. Add that to ..

14. B. This is a swing level that was put in
place between 2008-2009 before the
CAD decided to test the low of 2007.
Pretty important level and I was
thinking that price would make a run
for it so I was getting ready for the
daily chart to lead the way out.

15. C. The USD was losing momentum (better
seen on the daily chart) as it grinds higher
but each candle was closing bull except for
one whose low was not broken. Price
inched higher into the potential resistance
zone with the bears printing top shadows
on the daily and this was the area where
the scale out took place.

16. D. Bottom shadows on these candles
gave a sign that bulls were coming
back and was a good area to look on
the daily for opportunity.

17. You can see that the USDCAD chart
was giving the clues and all you had to
do was decipher what it was telling
you.

18. We went into a range through the first
quarter of the year with a strong
momentum candle shattering the floor
which simply gave bulls an attractive
place to buy. It also gave those with
short term profit expectations some
clear shorting opportunities.

19. Heading to July 15, the day of the BOC rate
cut, there's a another story that the chart
is telling. I don't read the current candle as
an exhaustion (yet) but the scale out has
more to do with the rate cut, resistance
broken, resistance overhead, and also that
today's candle is certainly a "that's
different" candle.

21. A. This is the resistance zone we saw
earlier that has held for months and
the candle of the 15th, took it out.

22. B. This is a potential resistance zone
that was set back in 2008-2009. That
is the same zone where buyers of CAD
(sellers of USD) stepped in quite hard
to drive the CAD into strength.

23. C. This is a weekly trend line and you
can see the duplicate one is being
breached.

24. D. Is an interesting area because this
was a bull flag and while the detail is
not there but can be inferred by the
black doji, once it was breached, price
chopped around above it with weak
bear interest. This alerts me even
before the news that there is a
potential play coming.

25. This also can be a buying opportunity
in a retracement except price structure
in terms of what was potential
resistance, is just above. It works, but
in my books it was a low probability
trade.

26. E. This is the zone where the scale out
took place.
The question is why?

27. Candles like this are a gift where you
can amass the amount of pips/points
that can take days to make.
However that was just one of the
pieces of the puzzle and now we can
look at the location on the trading
chart:

28. Breakouts are usually failures and at
the very least, we generally see a
pullback in price.
The potential resistance of 2008 is not
too far from this level.

29. Is it possible that price will just ram
through the resistance? It certainly is
but so is price stalling for time and
then slamming back down. Often
times, being stuck in a range not only
holds up capital but can also exhaust
mental capital as well.

30. As traders, we are risk managers and
reading the chart the way I did (you
may read it entirely different), it made
sense to lighten the load and see what
plays out. These are not difficult
concepts to understand although they
can be difficult to accept, trust, and
implement.

31. The principles laid out here have been
around for decades and you will be
well served to study them and perhaps
implement them into your own
trading.