Cross-Eyeing: Breakdown on EURCAD? – Trade Closed

Trade Closed: 2010-09-09 13:45

PoD Chart

EURCAD broke down yet again from another bearish pennant and my order at 1.3145 got triggered at the start of the European session. However, it definitely wasn’t smooth sailing from there. In fact, it was just darn right ugly, just like Rajon Rondo’s jumper.

Trading was pretty choppy, for awhile, it seemed the pair would zoom all the way back up. Luckily for me, the pair dropped and made new lows, even overcoming the poor Canadian trade balance results.

I decided to call it quits, as I’m not quite sure how much upside the Loonie has left for the rest of the week. Against the dollar, it’s sitting right on top of a former falling trend line, which may act as support. Meanwhile, EURUSD failed to make any new lows, as the euro remained resilient against other pairs as well.

I’m quite happy with this trade, as I was able to squeeze out a few more pips out of it. Here’s the quick summary of what happened:

1st position entered at 1.3235, closed at 1.3133 – +102 pips / +0.72%
2nd position entered at 1.3235, closed at 1.3133 – +102 pips / +0.72%
3rd position entered at 1.3145, closed at 1.3133 – +12 pips / +0.13%

Total – average of 72 pips / 1.57% gain

So, a decent win on my part. Hopefully with the end of summer, we can see more big moves like this, which would make it easier for me to tackle these cross trades. For now, I’m going to have to keep brushing up on my fundamentals, and keep matching the weak with the strong.

To those who are gonna trade this Friday, good luck! As for me, time to hit the driving range and enjoy the weekend!

Trade Idea: 2010-09-09 02:55

PoD Chart

Aaaand they actually did it! As expected, the BOC decided to go with the flow and raise its interest rates to 1.0%. What’s more, BOC officials spouted some hawkish comments that woke up the Loonie bulls like crazy! Of course, it also helped that Canada’s Ivey PMI kept the rally swingin’. The Loonie gained across the board, with EURCAD dropping almost 150 pips, triggering me in the process!

Unfortunately, my first TP just barely missed, as price only went as low as 1.3172. Part of me also thinks I could have had a much better entry, but with the major rising trend line, I think I made the right decision.

The pair now seems to be forming ANOTHER bearish pennant… I think this presents a opportunity to press and play! After all, I still think that the euro is weak right now and could experience more losses. I have to take advantage and hopefully, I’ll catch another big drop.

Here’s what I’m looking to do:

Move stop to breakeven at 1.3235. Take off take profit order at 1.3165. Add half position at 1.3145 if the pair breaks below the previous support area.

I’m only looking to add half my original position, so as to effectively halving my initial risk. If I do get triggered, I will make adjustments accordingly, and possibly add if the move is really strong. If however, it seems like the support level is holding, I will close out my full position and call it a week.

Let’s see how this pans out for me! As the old saying goes, gotta risk it to get the biscuit!

Trade Idea: 2010-09-08 00:59

So before I went to sleep last night, I started thinking of my golf swing… cause you know, it’s kinda hard to play when you only have one club, a wooden one at that. Ha! Anyway, as I was analyzing my swing, my thoughts started drifting towards the markets.

Ah, the wonderful markets. You see, I had my eye on the euro the whole day, as it was dropping across the board. Apparently, them banks over at the bank stress tests. This raised concerns as to how much risks European banks are exposed to, which caused a major euro sell-off.

So now, I believe that this euro weakness could linger in the markets. I think with the return of risk aversion, traders will find other assets to invest in. I’ve looked around the charts and I think I’ve found a nice setup. Let’s take a look at EURCAD shall we?

PoD Chart

It appears that EURCAD is finding support on a longer term rising trend line, while stochastics are showing oversold conditions. Technically, this might look like a good time to buy, but I am fundamentally biased against the euro right now. Also, it seems to me that a bearish pennant is forming, so if we see a break of recent lows, it may signal a strong move lower and price could test former lows.

So why this setup? Well, aside from being bearish on the euro, I do think there is some upside for the CAD to gain, as we’ve got some high impact reports coming out today. The most important data that I’m going to keep my good ol’ eye on is the Bank of Canada interest rate decision. Word is that the bank will be raising rates to 1.00%. Of course, this might be priced in already, but like Happy Pip, I’ll be waiting for any hawkish comments in the accompanying statement, as the CAD may rise across the board.

On the European side of things, you never know when more bad news about the recent stress tests may come out. The combination of potential euro weakness and Loonie strength may lead to a breakdown of the bearish pennant. I’ve decided to set a short stop order just below this week’s lows, while putting my stop above the 1.3300 handle. I’ll be aiming for the previous lows of the trendline at 1.3165 and 1.3000.

So here’s my game plan:

Short stop order at 1.3235, stop loss at 1.3305, TP1 at 1.3165, TP2 at 1.3000.

Of course, the news may not come out as I expect it to, so I’ll have to adjust quickly. If for some reason our buddies at the BOC decide against raising rate, I may consider taking a long trade, as the rising trendline support would be validated.

So now, all I have to do is sit back and relax… or work on my golf game! If you have any tips on how I can improve my swing, holler at me at MeetPips.com!


  • ZenTrader108

    I like both yours and happypips trades but not too sure I’d like to hold them over the BoC decision. Not that I think that they won’t raise rates but every time they do raise rates they do so with a very dovish caveat.

    Personally I think this is quite smart as they take some heat out of the economy and keep their inflation fighting credential intact while the comment ensures the long end of the curve stays down and the currency doesn’t appreciate too much. Hence it won’t hurt growth too much.

    We will see and I wish you luck – I’ll hopefully joining you on the on the other side.

  • BlackLotus

    NICE! Worked PERFECT!

  • ZenTrader108

    I like both yours and happypips trades but not too sure I’d like to hold them over the BoC decision. Not that I think that they won’t raise rates but every time they do raise rates they do so with a very dovish caveat.

    Personally I think this is quite smart as they take some heat out of the economy and keep their inflation fighting credential intact while the comment ensures the long end of the curve stays down and the currency doesn’t appreciate too much. Hence it won’t hurt growth too much.

    We will see and I wish you luck – I’ll hopefully joining you on the on the other side.

  • davidnorman

    Sadly IG Index have a 10pip spread on this cross so stayed out….wish i hadnt…nice spot

  • BlackLotus

    NICE! Worked PERFECT!

  • davidnorman

    Sadly IG Index have a 10pip spread on this cross so stayed out….wish i hadnt…nice spot

  • Cyclopip

    Thanks for the comments fellas! I just made some adjustments to my trade, as I think this pair has room to keep falling. I will be monitoring this throughout today’s European and US sessions though, as I feel I’ll have to adjust quickly.

  • Cyclopip

    Thanks for the comments fellas! I just made some adjustments to my trade, as I think this pair has room to keep falling. I will be monitoring this throughout today’s European and US sessions though, as I feel I’ll have to adjust quickly.