Long USD/CAD after the FOMC

Forex Trade Idea: 2014-09-17

Took a swing on on my forex watchlist pair after today’s FOMC meeting.  Greenback buyers took control against the Loonie at interesting technical levels.

Before you move on, for those who are not familiar with my framework, signals, setups, or acronyms, please visit my discretionary trading framework blog.

USD/CAD 1 Hour Forex Chart

USD/CAD 1 Hour Forex Chart

I mentioned earlier in the week that USD/CAD presented a nice technical setup in favor of the Greenback.  And it was a way to play the FOMC monetary policy decision that was just released a couple of hours ago, in which the cut assets purchases by another $10B, no change to interest rates, and kept the “considerable time” language in reference to when we may see the next rate hike.  The reaction was bullish for the Greenback, and specifically, USD/CAD held the area I’d been watching out for support (1.0950 – 1.1000).

With the bulls holding in that area, I thought it made sense to take a swing on this setup, going long at market.  I set up my stop pretty wide (over one weekly ATR), but if the market breaks back below the rising trendline, I’ll most likely close the trade early.  And my max target will be the previous swing high, although I may make adjustments to my plan to hold on long and lock in pips if I reach that point and the environment continues to be very bullish for the pair.  Here’s what I am doing:

Long full position USD/CAD at market (1.1005), max stop at 1.0835, max profit target at 1.1200

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t follow what I do. Risk Disclosure.

I’m only risking 1.00% of my account on this one, and with this trade structure, I have a potential reward-to-risk ratio of about 1.17:1. But given the freshness of the FOMC event, I may close early for a small profit if sentiment shifts in favor of the Dollar bears.

Of course, anything can happen in the forex markets, so if the story changes I’ll be sure to reassess and adjust quickly if necessary. Stay tuned by following me on Twitter and Facebook!

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  • Jo D

    im more of a grid-type, that means smaller lots ofcourse, but my honest opinion and personal paperless analysis would say that, considering your stop loss isnt too stingy it has a very decent chance of success.
    If you’re a technicalist or chartologist you could say a head and shoulders is there almost on the 4H but the considering the trendline as you gave it looks like everything should be well within parameters, right ? i hope it goes down a bit first before continuing up actually, always better, makes the grid last longer 🙂

    • Pipcrawler

      Thanks for your thoughts Jo D! It did go down quite a bit before turning higher and getting back into the uptrend. Did you get a chance to hop in?

  • aj

    Will this hit the SL. Already it has -82 pips.

    • Pipcrawler

      I never try to predict the market anymore, just find probabilities of where it may go and build a plan to take advantage if it does go my way. At this moment, USD/CAD is back up above my entry, so we’ll see where it goes from here. Thanks for checking out my blog!

      • aj

        Thank you very much.

  • Pipcrawler

    Hey liliku, I’m in just watchmode for now. If USD/CAD does get back up to 1.11, I’ll probably adjust then, but for now it’s up to the market and not much to do really. Did you take a trade in USD/CAD?

  • Pipcrawler

    Closed my short-term USD/CAD long trade after a nice rally by the Greenback today. #Forex trade review coming soon!

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