Canadian Dollar Futures Trading Plan and Explanation
After analyzing options trades on CME, we found a promising opportunity to short Canadian Dollar. The option contract is for April with an expiration date of April 5, 2024.
We noticed an interesting option portfolio on March 22 that aligns with the trigger level on the futures chart (refer to chart). A trigger level is a graphical pattern on the underlying asset that
prompts traders to take or avoid specific trading actions.
For the Canadian futures chart, the trigger level is the price breakdown of the local resistance at 0.7403-0.07406. Opening long positions at the breakdown point was encouraged by the bullish shape and intensity of the candlestick with minimal shadows. This level was attractive for making purchases for both chartists and adepts of candlestick analysis.
The study of options trading has revealed that these levels are useful for opening counter positions when the price reaches them. To execute this strategy, smart traders use naked options in advance, specifically PUT options with a strike of 0.74. By utilizing the leverage effect of options, traders can create substantial short positions on futures contracts while maintaining a risk-free position for a limited time.
IMPORTANT! We do not expect the price to move towards the strike level. Instead, we recommend using the obtained exchange data and analyzing it to gain an edge when opening a trade, providing a better starting point and improving the risk/reward ratio.
We noticed an interesting option portfolio on March 22 that aligns with the trigger level on the futures chart (refer to chart). A trigger level is a graphical pattern on the underlying asset that
prompts traders to take or avoid specific trading actions.
For the Canadian futures chart, the trigger level is the price breakdown of the local resistance at 0.7403-0.07406. Opening long positions at the breakdown point was encouraged by the bullish shape and intensity of the candlestick with minimal shadows. This level was attractive for making purchases for both chartists and adepts of candlestick analysis.
The study of options trading has revealed that these levels are useful for opening counter positions when the price reaches them. To execute this strategy, smart traders use naked options in advance, specifically PUT options with a strike of 0.74. By utilizing the leverage effect of options, traders can create substantial short positions on futures contracts while maintaining a risk-free position for a limited time.
IMPORTANT! We do not expect the price to move towards the strike level. Instead, we recommend using the obtained exchange data and analyzing it to gain an edge when opening a trade, providing a better starting point and improving the risk/reward ratio.
Comment:
It's good practice to take a step back and evaluate your forecasts. I'm looking at the Canadian dollar forecast from March 24. At the time, there was no certainty that the price would return to 0.74. However, this level was a good selling point. The level was reached and used, which was no accident. Those who follow our commodity and currency market analyses and forecasts know this. Who are still wandering in the labyrinths of numerous indicators, we can only say that "The market sees liquidity and hunts for it, it has no idea that it should move according to RSI or MA" This is a simple concept, but it's hard to accept, especially for beginners in the financial markets....