USDCAD is one of the most trending pairs in the forex industry. Long term trader and day trader love to trade this pair because of the long prevailing trend of this pair. Testing strategies after strategies professional trader has now developed a unique system of trading this pair only by using exponential moving average and ATR indicator.
USDCAD daily chart
Figure: USDCAD daily chart with 21 days and 8 day exponential moving average.
In the above figure, two exponential moving average and ATR indicator are used to trade this trending pair. The trader simply uses moving average crossover and previous support and resistance zone for identifying the potential entry point. The ATR indicator serves as the filter to take the best possible trade.
Trading condition and entry signal
- Two exponential moving average should be used while trading this trending pair.8 and 21 exponential moving average is used in this strategy.
- Traders wait patiently for the moving average crossover to identify their potential trade setup. When the 8-day exponential moving average is above the 21-day exponential moving average trader look for buying opportunity. Bearish opportunity is presented in the chart when 8 days EMA is below the 21 days EMA
- Once the crossover of the moving average is confirmed traders look for previous support and resistance level to enter into the trade.
- The ATR range should be in overbought condition for sell setup and for the buy setup it should be an oversold condition.
- Once the trade is executed trader set their stop loss below or above the previous support or resistance level depending on the trade.
- As long as the two EMA diverge away from each other trader can ride the trade with great confident by trailing their stop loss.
- Trader books their profit of the long ride of the trend when there are new potential crossover phenomena of the 21 days EMA and 8 days EMA.