The current daily chart of the USD/CAD is very interesting. It could be an optical illusion for some traders. It this market still in a downtrend as noted by the lower highs designated by the A, B and C tops? Or have we seen a change of trend to the upside noted by the higher lows designated by the #1 and #2 bottoms? This is important since we only want to take trades in the direction of the trend as seen on the daily chart. If the daily trend is up, then we should only look for buys. If the daily trend is down, then we should only look for sells. Rather than force a decision, we are better off only trading those trends that are obvious. If you look at a daily chart of a currency pair and can make a case for either direction, you should probably skip the pair and move on to the next one. Finding the strongest trends to trade is a choice that we can make before entering into a trade. It is an important decision to make as trading with the momentum of the market increases our chance of success. I always tell new traders in our FX Power Courses to be very picky about what pairs to trade. With time, you may add the fundamental picture to help in these situations, but finding the strongest trends should be an easy task. Most pairs should fall into the “I don’t know” category, meaning that the trend is not strong enough to offer a solid trading opportunity. But there are usually a few pairs that are in an obviously strong trending move and these are the pairs we should concentrate on when looking for trading opportunities.
