The daily chart USDCAD was signaling a trend favouring the Canadian dollar over the US dollar.
In February 2010 the 4 hr USDCAD chart saw a signal confirming a continuation of the daily trend.
Our MACD picked up the signal at 1.045 on February 16. However by February 25 the USDCAD was being auctioned at a quote of 1.067. Initially it seems that we were wrong. Had we bought Canadian dollars on our 4hr signal we'd be a full 2 points out of the money on February 25.
Worst had we dumped our CAD's with a loss then we'd have watched a rally favouring the CAD all the way to USDCAD parity by April 21.
Playing the signal correctly is more important than finding the signal.
The hourly chart gives a clue as to how to load up on Canadian dollars in a period of resistance.
Is this a sure bet ?
Hardly!!!! Loading up inside a resistance to a longer trend is a common practice amongst traders. How much and when to accept that the resistance is actually support is what separates the winners from the losers.
Money management and risk aversion answers the question of how much and stop losses or hedging techniques protect the end results.
Hang Eleven is about riding waves naked. That means that this trading technique exposes the forex trader on one side of the trade with no protection other if the signal fails completely.
But we have ways to cover our nakedness really quickly. This will become evident in time.
Waves come in all sizes and one person once stated that nature never lies and by nature large waves expose nakedness in large ways.
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