Close Open Orders: 2009-11-04 13:42
Welps…it looks like USDCAD was ready to breakout, but to the downside! Positive ISM data from the US brought back the risk bulls out, taking traders away from greenback and moving back to the Loonie. The pair broke well below the rising trendline and finally found support at 1.0600. Needless to say, it’s time to close my open orders, especially ahead of the upcoming FOMC event.
Closed Open Orders. No trade.
Alrighty, nothing to do now but wait for the FOMC meeting before making any moves. Stay tuned and be safe in these wild and crazy markets!
Trade Idea: 2009-11-03 04:22
Good morning Forex friends! For this week, I am watching USDCAD for a potential breakout on a classic chart pattern setup. Are currencies ready to move with all the major data coming out this week?
First, the technicals. I have the one hour chart up and we can see an ascending triangle forming. This shows buyers growing in strength, jumping back in on every dip, but sellers have been able to hold buyers off around 1.0800 – 1.0850. Sooner or later, sellers wouldn’t be able to hold back the buyers and a reakout may occur. Will we see a breakout? Not sure, but the current market sentiment may give us a clue.
This past week, we have seen a return to risk aversion sentiment across the global markets on continuing economic weakness concerns. This has traders selling “riskier” assets (like commodities, equities, and “high-yielding” currencies), and flocking back towards “safe haven” assets like the Greenback. Are traders right in that we will see further weakness? There’s so much data out there pointing to one way or another that it is difficult to weed out what really matters.
For me, I’m basing my bias on this one thought – if the economy is getting better, why do governments need to extend stimulus programs like unemployment benefits, home buyer credits, and quantitative easing measures? Makes no sense. While I think governments have been a little slow in the recent past to recognize potentially dire situations, I would have to agree with what their actions are saying – the economy is weak and cannot survive without its help. I think risk aversion behaviors in the markets are likely to continue in the short to medium term, and I’m willing to take a calculated risk on it.
Last factor to take note of is this week’s major economic events. Most notable include the FOMC interest rate decision and the US and Canadian employment reports. I’m not going to try to forecast numbers, but I will say that they have the potential to facilitate a breakout move, depending on the final reads and market reactions. Check out our Forex calendar for specific data and times of these releases.
So, I am taking a long trade in USDCAD based on my technical analysis and fundamental outlook. I will buy above the resistance area, just above last week’s high point. My stop will be 150 pips (daily average true range and below the rising trendline) and I will target the area of last resistance between 1.1000 to 1.1100. Here is what I am going to do:
Long USDCAD at 1.0875, stop at 1.0725, pt1 at 1.1000, pt2 at 1.1100
Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.
An interesting week ahead of us with the potential for some really nice trades! Thanks for checking out my blog and stay tuned for updates and adjustments!