If you are one of those traders who prefer to keep their eyes glued to the long term profits, here are three potential trades worth keeping their eyes on.

The premise for choose these three trades is based on the following criteria.

1. Positive Swaps: Considering that long term positions will attract overnight swaps, a good strategy is to pick the ones that also offer positive overnight swaps in the long term. These additional ‘profits’ can help traders to meet trading costs, whether it is spreads or even commissions.
2. Fundamentals: Fundamentals play an important role in the long term trading as trends are basically formed due to the underlying forces. Fundamentals such as economic growth, inflation and most importantly monetary policy can help traders gain confidence in their trades.
3. Technical Analysis: Technical analysis forms the final block to the puzzle, more specifically price action methods such as candlestick charts, which merely exhibit trader’s emotions in the markets and it is these emotions and sentiment that drives the markets.

So without further ado, here are three possible long term trades to keep an eye on. It is however recommended that traders do their own due diligence before blindly following the ideas presented here. We would also like to reiterate that the ideas presented in this article is not a trading recommendation and therefore readers are at their own risk on following up to these ideas.

CADCHF

Swaps: Positive swaps on longs

Fundamentals: We are of the conviction that the Swiss Franc is considerably weaker than the Canadian dollar. Although the Loonie has been hit by the falling Crude oil prices, we suspect that the Oil exposed economies will soon diversify their risks (if they haven’t already) in light of a continued long term bearish view on Oil. Furthermore, the SNB is now more flexible and free to do what it wants after the Swiss voters rejected the Gold referendum. With the ECB’s QE an almost done deal, the SNB’s action last week to introduce negative deposit rates might have come a bit too soon which raises the risks that the Swiss National bank will start to intervene in the currency markets, selling the Swiss Franc. The SNB is well known for its vast forex reserves and have been on a buying spree for most of this year.

Technical Analysis

The weekly charts for CADCHF shows price action close to a major multiyear trend line. Price in the past has bounced off this trend line but more recently, found support near 0.7831 regions, forming an ‘almost’ double bottom. Candlestick pattern shows a doji formation near this bottom followed by bullish candlesticks.

During the leg up after finding support at 0.7831, CADCHF has consistently made higher lows with the most recent low finding support near a previous low at 0.82474. Last week’s candlestick pattern also shows a bullish piercing line candle formation which is bullish.

We would ideally look for a break of the minor trend line and resistance at 0.85895 with a retest of this level for support. Clearing this level will see a rally to test the major longer term trend line towards 0.8802 region as well as the possible reactive levels marked on chart.