Cross-eyeing: Long-term Falling Trend Line on EUR/CAD – Trade Closed

Trade Closed: 2012-01-06 00:24

EUR/CAD 1-hour Chart

This trade couldn’t have gone any better! It seems I caught a top when I shorted EUR/CAD just above the 1.3200 handle because in no time at all, EUR/CAD plummeted and set me up for a big first win.

Bearishness for the euro resumed on Wednesday as the markets shifted their attention back on the euro zone and its never-ending debt problems. A string of weak euro zone reports and disappointing bond auctions caused investors to ditch the euro again, making the euro the weakest currency among the majors.

But what’s interesting is that even though risk aversion prevailed during this time, the Canadian dollar was actually quite resilient relative to other major currencies. I think rising oil prices might have had a hand in keeping the Loonie from taking as big a hit as other currencies. In any case, this market environment was just what my trade needed!

As you can see, everything went almost like clockwork as price promptly came falling down soon after I had entered my orders. Within 24 hours, I had already hit my first profit target. And not long after that, I ended up closing my remaining position!

Took profit on half my position at 1.3100: +105 pips / +0.66%
Closed remaining half manually at 1.3030: +175 pips / +1.09%
Total: +280 pips / +1.75%

Though I think the pair still has plenty of room to fall, what with its long-term trend line well intact and the outlook for the euro zone still as gloomy as ever, I think now would be a good time to bag some pips.

The U.S. NFP report is just around the corner, and I don’t wanna expose myself to that kind of event risk again. I’ve learned my lesson, thank you!

Needless to say, I’ll be looking for more opportunities to short the euro if all this bearishness persists. In the meantime, I’m off to enjoy the weekend with a pint in one hand and a rabbit leg in the other!

Thanks for following me and see you all again on Monday!

Trade Idea: 2012-01-03 23:08

After scaling through numerous charts, one thing I can say is this: the euro sucks. Over the past couple of weeks, it has melted like a block of butter in a frying pan, sinking against all of its major counterparts. One pair in particular that caught my eye is EUR/CAD.

Check out this falling trend line on the 4-hour chart:

EUR/CAD 4-hour Chart

See what I’m talking about? After chillin’ around the 1.4000 handle in late November, the pair has dropped 800 pips over the past 5 weeks! Now that this pair is sitting right smack below the falling trend line, I think this could be a good opportunity to hop on the short euro bandwagon!

EUR/CAD 1-hour Chart

I’ve zoomed into the 1-hour chart to help me spot a good entry and it seems that now would be a good time to short. Stochastic is showing overbought signals, while the pair is finding resistance at the 1.3200 MaPs and the WO.

Fundamentally, the euro was the weakest currency during the holiday break and for good reason. Italian 10-year bond yields are still above the key 7.0% mark and this helped spark a mini-run of risk aversion midway through last week. Meanwhile, comdolls like the Canadian dollar remained steady and even posted some gains.

This tells me that perhaps the markets weren’t in total risk aversion mode – rather, they were simply avoiding the euro!

I’ve decided to enter at market, at 1.3205 with my stop loss set at 1.3285. If price were to hit this level, it would indicate a break of the falling trend line, therefore invalidating my trade idea.

As for my profit target, I’m looking to take some profits off the table at 1.3100, which is just above the bottom WATR. Ultimately, I’m aiming for the 1.3000 handle, but I’ll definitely be open to making adjustments along the way.

As usual, I’ll be risking just 1% of my account on this trade.

Short EUR/CAD at 1.3205, stop loss at 1.3285, 1st profit target at 1.3100, ultimately aiming for 1.3000.

Hopefully, I’ll start 2012 off on the right foot and grab some pips on this trade. Who’s gonna hop on this trade with me?


  • Costarica

    so far so good man..i’m with you on this one..

    • cyclopip

      Thanks, bud. Let’s see how far this pair falls!

  • MaxiV

    went in on this and got my 95 odd pips….!

    • cyclopip

      Sweet! Have you closed your trade already, or are you in this for the long haul?

      • MaxiV

        yes i did… but only to keep within my MM% as i had other trades open.

  • Cyco

    I went short on this at 1.3618, for a 500+ pip gain on this so far, stop at 1.32 (moved daily) and letting it run

    • cyclopip

      Congrats on catching this move early man! Good idea to let it run, euro looks like it still has room to fall in the long run.

  • cyclopip

    BTW, EUR/CAD hit my first profit target at 1.3100 already, so I closed half my position… Let’s see if PT2 will get hit as well!