Part 1) introduction

VolatilityMarkets suggests trend-inspired trades that capitalize on market trends.

In the short term USDCAD has been negatively accelerating higher. In the long term USDCAD has been accelerating higher. With the short term trend being the stronger of the two, we propose a long trade idea with a one week time horizon.

Part 2) trade idea details

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Buy $ 110,254 USD, or 1.1 lots of USDCAD, take profit at $ 1.3822 level with 25.01% odds for a $ 1,712 USD gain, stop out at $ 1.3487 with 50.0% odds for a $ 1,000 USD loss.

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The BoxPlot below outlines the take profit and stop loss level placement of the trade idea, the inter-quartile range of expected traded outcomes, as well as the best and worst case scenario on the whiskers.

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Scenario Analysis:

There is a 25.01% probability that the take profit level will independently trade over the 1w timeframe.

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There is a 50.0% probability that the stop loss level will independently trade over the 1w timeframe.

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There is a 37.49% probability that neither the stop loss level nor take profit level will independently trade over the 1w timeframe.

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There is a 12.51% probability that the strategy succeeds by having the take profit level touch and the stop loss level not touch over the 1w timeframe.

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Part 3) USD/CAD trend analysis

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USDCAD last price was $ 1.361014. The short term trend negatively accelerating higher is stronger than the long term trend accelerating higher. This trade goes long when the last change was higher but decelerating.

Price Summary

Today's last mid price was $ 1.361014.

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Price Changes

Over the past 20 Days, the price has increased by 2.72% percent.

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Long Term Trend Analysis:

This trade goes long when the price was moving higher but decelerating over the past 20 days.

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Over the past 20 days, the price has on average been accelerating 4.5774 pips per day

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Short Term Trend Analysis:

This trade goes long when the last change was higher but decelerating.

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Over the last session, the price has decelerated -16.42 pips

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Part 4) USD/CAD value analysis

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Over the past 20 days, the USDCAD price increased 12 days and decreased 8 days. For every up day, there were 0.67 down days. The average return on days where the price increased is 0.5023% The average return on days where the price decreased is -0.4127% Over the past 20 Days, the price has increased by 2.72% percent. Over the past 20 days, the average return per day has been 0.136% percent.

Market Skew

Over the past 20 days, the USDCAD price increased 12 days and decreased 8 Days.

For every up day, there were 0.67 down days. 

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The average return on days where the price increased is 0.5023%.

The average return on days where the price decreased is -0.4127%.

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Part 5) USD/CAD worst/best case scenario analysis

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Within 1 week, our worst case scenario where we are 95% certain that this level won't trade for USDCAD, is $ 1.324743 , and the best case scenario overnight is $ 1.397285 . levels outside of this range are unlikely, but still possible, to trade.

We are 50% confident that $ 1.3487 could trade and that $ 1.3822 could trade. These levels are within statistical probability.

Expected Range

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'Within 1 week, our worst case scenario where we are 95% certain that this level won't trade for USDCAD, is $ 1.324743 , and the best case scenario overnight is $ 1.397285 . levels outside of this range are unlikely, but still possible, to trade. We are 50% confident that $ 1.3487 could trade and that $ 1.3822 could trade. These levels are within statistical probability.

Probability Vs Payout Chart:

This graph contrasts the percentage payout of holding a position vs the probability that the payout occurs. The red and green columns represent the probability of stopping out and taking profit and their associated payouts.

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Key Takeaways:

  • Price today $ 1.361014.

  • Over the past 20 days, the USDCAD price increased 12 days and decreased 8 Days.

  • For every up day, there were 0.67 down days.

  • The average return on days where the price increased is 0.5023%.

  • The average return on days where the price decreased is -0.4127%.

  • Over the past 20 Days, the price has increased by 2.72% percent.

  • Over the past 20 days, the average return per day has been 0.136% percent.

  • Over the past 20 days, The price has on average been accelerating: 4.5774 pips per day higher.

  • Over the last session, the price increased by 102.17 pips.

  • Over the last session, the price increased by 0.7507 %.

  • Over the last session, the price decelerated by -16.42 pips.

Volatility Markets provides trend following trade ideas for momentum traders. The Volatility Markets Newswire measures the direction and acceleration of a security and then structures a trade idea to capitalize on the trend. While trends have been shown to exist in markets over the past 100 years, they are no guarantee of future asset prices. You should take these ideas lightly and at your own risk.

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