Cross-Eyeing: Rising Channel on CAD/JPY – Trade Closed

Trade Closed: 2011-02-04 03:49:21

CAD/JPY Daily chart

Since I entered this trade, I’ve had to put up with two crazy scares. I swear, if my heart were as frail as Pip Diddy‘s, I would’ve died of a heart attack!

The first scare came immediately after I entered this trade. But CAD/JPY was able to bounce back strongly after that. Apparently, all the commotion in Egypt has been causing oil prices to rally, taking the Loonie along for the ride. Aww yeah!

But just when I was beginning to think I was in the clear, out came ECB President Jean-Claude Trichet with some not-so-hawkish words at the ECB press con. This sort of irked a lot of investors because most were expecting him to be hawkish in light of rising inflation. As a result, a whole mess of currency pairs took a sharp dive, including CAD/JPY. Take a look at that wicked-sick pinbar that formed on it!

Anyway, I promised myself I wouldn’t hold this trade over the release of Canadian employment data and the U.S. NFP report, so I decided to close up shop early. Those releases have caused explosive moves for the Loonie in the past, and I don’t want to leave my trade vulnerable to any wild swings.

I may not have hit my target this time, but exiting with SOMETHING is always better than leaving with NOTHING.

In the end, this is how it all played out:

1st position and 2nd position closed manually at 82.37 : +27 pips / +0.27%.

Right now, I’ve got to admit I’m actually feeling pretty good about this. Though I didn’t win big, it still feels great to get back on the winning side. Now to celebrate over the weekend… Big Pippin, food’s on you, right???

Trade Idea: 2011-1-31 22:50

CAD/JPY Daily chart

Now seems like as good a time as any to buy the Loonie! Not only have commodities been on the rise, but oil prices could be receiving additional upward pressure with all the commotion in Egypt threatening to limit oil supply.

On the domestic front, things are looking really tight as well. Yesterday, word got out that Canada recorded the fastest pace of growth in eight months back in November. The best thing about it is that improvements were seen in many aspects of the economy, and not just a select few. Trade picked up, job growth has been healthy, and consumer spending has been strong, too.

The outlook seems really bullish for the Loonie over the next few days as far as fundamentals is concerned. So I tried to look for a nice technical setup to complement fundamentals.

On the 4-hour chart of CAD/JPY, you’ll notice that a very distinct doji recently formed right on the long-term rising channel. If you set your eyes on Stochastic, you’ll see momentum seems to be turning in favor of buyers as well–it’s on its way out of the oversold region.

I took the trade as soon as I spotted setup. I set my stop a few pips below the previous low, exactly 100 pips away.

I’m eyeing the recent high at around 83.50 as my first take profit target. This is also near the middle of the channel, so we could see some resistance at that area. Ultimately, I’m hoping price will create a new high and tap 85.00.

So here’s what I’ve come up with:

Long CAD/JPY at market (82.10), stop loss at 81.10, take profit at 83.50 and 85.00.

If both my targets are hit, I should end up with an average profit of about 215 pips, giving me a reward to risk ratio of just over 2:1.

Alright, that’s all for now. Thanks for reading my blog fellas and good luck this month! Hopefully we can all start off on a solid note! If you wanna take a look at my past trades, you can also hit me up at MeetPips.com!