EURCAD: Potential rally after downtrend time expiredIn this chart we have a nice long setup, with a premature entry, based on a series of factors, ahead of the time at mode confirmation for this trade.
Since we're above the mode, or most frequent price since the recent low, it's likely to see uptrend continuation, specially considering that the downtrend we had observed in the daily (see my related publications) has reached the target, and the time duration of it expired. This implies price can rally back to the downtrend mode, which is what I expect based on the eurusd, usdcad and oil charts.
We can enter preemtively now, using a wider stop and a smaller position (1% risk at the 3 atr stop on chart), and set a generic 5 atr take profit. This type of entry lets us 'feel the waters' in many instruments, and focus on adding to those that are currently performing best. We can also use paper trading accounts to take positions we wouldn't normally take, or to sell when we close any long trade, etc. and track our performance this way.
I hope you find this useful, it's not always about using tight stops, but having lower risk from time to time, can favor our equity curves too.
The horizontal lines are 1 atr distance levels, where I would like to add to the trade (and which would confirm the strength of the proposed uptrend). After exceeding 1 atr profit, we can add on any setback, no need to add if price keeps going up with no retracement.
Happy Easter!
Ivan Labrie
