2021.03.15 CADUSD Futures Strategy Update
2021.03.15 CADUSD Futures Strategy Update
Readers of the 2021.02.19 CADUSD FUTURES STRATEGY newsletter recall how I was bullish on the CADUSD pair as it tested new highs.
You can read that report here: 2021.02.19 CADUSD Futures Strategy
The chart below is from that report and you can see the price was at .79205 and testing the recent highs.
Let’s take a look at what happened since then.
Since then, CAD surged higher, before pulling back while making higher lows and higher highs keeping with the uptrend.
At the time of this publication, the CADUSD pair is sitting at .80160.
The purple Volume-Weighted Average Price from the September 10, 2012 high is sitting overhead at 0.81025.
I will be watching to see how CADUSD reacts at this level.
As you can see in the above chart, CADUSD is extended, reaching a level of previous resistance coinciding with the VWAP from September 10, 2012.
Often previous resistance brings in sellers.
I will be watching to see if sellers gain control in the area of the purple VWAP and push prices back to the area of previous resistance in the .77 area.
Will that happen?
I have no idea.
However, I am bullish as we continue making higher highs and higher lows.
When the trend changes, so will my bias.
Transparency is important to me.
I track my Klarenbach Research Telegram Group ideas here on my website.
Warts and all.
Following the 2021.02.19 newsletter, using the CME Trading Simulator Practice Account, I entered two CADUSD long positions in both the March and June Futures contract months.
I use this account to demonstrate the effectiveness of using futures as a hedging tool in a risk management plan.
Futures contracts are often used as hedge offsetting the movements in the cash price.
While this can be effective in securing profits, I question why anyone takes a long position in a downtrend.
Each to their own, however, I do my best to avoid down-trending long positions.
Here is a screenshot of my CADUSD CME Trading Simulator Practice Account.
As you can see above, I took profits of $930 on the March contract ahead of the expiry
As the purpose of this exercise is to demonstrate the effectiveness of Technical Analysis and not to produce bragging rights of profits, I keep the contract sizes to 1 or 2 contracts.
I leave the math up to you to determine how many contracts are required for your risk management strategy.
As mentioned, the realized profits of the March contract was $930 USD less fees.
While this may not seem like a worthwhile exercise, consider that the margin requirements were $1210 USD.
$930 divided into $1210 works out to a 76.9% return
The March contract trade worked out well.
My June contract is still open and is currently green as well.
I will continue to raise my stop and let this winner run.
I enjoy discussing the markets, whether they are currencies, equities, commodities, or bonds.
I am fascinated with price action, so basically anything with a chart.
Let’s have a conversation and we can explore a new perspective of the markets that you can apply to your analysis.
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