If you watch any of my videos on InvestingLive.com or read my posts, you will notice that I am consistent in my technical approach.
I use the same tools to interpret the price action. Those tools help me:
- Define the market bias
- Identify and limit risk
- Establish realistic profit targets
In my post on Friday, I wrote:
For buyers, getting above the trendline and staying above it would be the first requirement if they are to take more control. They would also need to hold above the 50% retracement at 1.38663. Accomplishing both would increase the bullish bias and put the 100-day moving average at 1.39271 in play as the next major target.
That analysis was accompanied by the following chart:
So, what happened?
In trading today, USDCAD moved above the trendline and was immediately met with increased upside momentum. The price also extended above the 50% retracement at 1.38663, satisfying the two conditions needed to give buyers more control.
The next target was the 100-day moving average.
USDCAD rallied to a high of 1.3929, stopping just ahead of today’s 100-day moving average at 1.3930. Sellers leaned against that resistance and pushed the price back down. The pair is currently trading near 1.3900.
No special powers—just a consistent process
I do not have any special powers. I simply apply the same technical tools consistently.
Some traders may look at the chart and point out that the last time USDCAD tested the 100-day moving average, the price initially broke above it before rotating back below the moving-average line. Why didn’t the level immediately stop the rally that time?
There were more buyers than sellers at the initial test.
However, also note what happened when the price subsequently tested the trendline. The trendline held, and sellers took back control.
That is an important distinction. A technical level is not guaranteed to hold every time. Instead, it represents a point of interest where traders can watch the price action, measure the response and make a decision with clearly defined risk.
The lesson for traders
Use technical levels as decision points for your trades.
If you do, you can define, limit and accept your risk against a specific level. You can also structure trades in which you risk a little with the potential to make more than a little.
That approach can help you find better trade locations, improve your risk management and remove some of the emotion from your decisions. Over time, consistently following that process can help you become a better and more disciplined trader.
In the video above, I take a closer look at the USDCAD price action and explain how using technical levels consistently can help traders define their bias, manage risk and identify targets.
This article was written by Greg Michalowski at investinglive.com.from Investinglive RSS Breaking education Feed https://ift.tt/SHBGAzN
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