Buying USD/CAD at a Retracement – Trade Canceled

Trade Canceled: 2011-08-11 7:45

I can’t believe I missed my entry again! This wasn’t the first time I spotted a really valid setup but wasn’t able to take the trade. Just as in my short AUD/JPY trade idea last week, I got the direction right but my entry orders were too conservative.

In this case, the .9800 level held as support and the pair bounced off the 38.2% Fib level. It didn’t dip to the .9700 area as I expected since risk aversion popped its head back in the markets again yesterday. And I thought the upbeat Chinese trade balance could push USD/CAD down to my entry… Apparently not!

USD/CAD Retracement on 4-hour Chart

I’ll be canceling my open orders now since the pair came close to making a new high and invalidating the Fibs I drew. In fact, it’s starting to look like a double top formation on the 1-hour time frame. But since I’m not ready to jump into a risk-taking mode yet, I’ll just take off my open orders instead.

Some of you pointed out that USD/CAD probably won’t dip as low as my desired entry and you were right! I probably should’ve just jumped in at market, huh? How else do you think I could’ve played this trade better?

C’mon, don’t be shy to share what you think! You can post your thoughts on the comment box below or holler at me through my Twitter account or Playing with Comdolls Facebook page. Drop by my Comdoll Corners too, if you wish!

See you around,

Happy time

Trade Idea: 2011-08-10 7:45

After giving comdoll crosses a shot last week, I’m back to trading the dollar! This time around I’m thinking of buying USD/CAD at a retracement level.

Looking at USD/CAD’s 4-hour chart, we can see that the pair slipped down after it hit parity. Of course, it might have also helped that the FOMC statement was so bearish for the Greenback. With the Fed’s rates on hold until at least 2013, it’s no wonder that carry traders are flocking the high-yielding comdolls!

USD/CAD Retracement on 4-hour Chartt

The pair is currently flirting within the .9800 area, which was previously a significant resistance. I’m hoping that the positive Chinese trade balance data early today and a bit of dollar-selling could push the pair a little lower to my .9700 entry target.

Why .9700 you say? Well, I took a closer look at my horizontal lines and I saw that the minor psychological level is lining up nicely with the 50% Fib. If the pair reaches my entry and goes back up, I plan on taking profits at parity. Meanwhile, I set my stop loss 80 pips away at .9620 in case the Loonie traders are interested in dragging the pair to .9700 and the 61.8% Fib levels.

I have to watch this trade closely though. Aside from an already oversold stochastic signal, Canada‘s trade balance report due tomorrow could still surprise to the upside. Right now my forex friends are expecting weak trade figures from Canada due to weak U.S. economy, but we never know, right? Heck, risk sentiment has been shifting so often lately that I’m getting dizzier than when I do my cartwheels!

Anyway, here’s the gist of what I’m planning to do:

Buy at .9700, stop at .9620 and take profits at parity. Watch the trade closely and move stops and entry if Canada’s trade balance report (or any other major news) rocks comdoll sentiment.

What do you think? Did I miss anything? Don’t be afraid to give me a holler on my Twitter, Facebook, or on one of my Comdoll Corners!

Happy Trading!

Happy time

10 comments

  1. ascms

    It is now 8:56 so the economic report has been released and it wasn’t good.
    Personally I wouldn’t trade this pair today as I am not seeing any clear pattern emerging.

    Reply
  2. Bryon

    i thot about it a bit and am hesitant to buy an already overbot mkt, but bet still .9980 breached would pull 50-100 pips; would rather wait for a pullback to buy tho…the hrly chart also shows a breach of .9980 could have some momentum

    Reply
    • Happy Piphappypip Post author

      Yeah, it even looks like a double bottom on the daily chart, but it’s having a tough time breaking above the neckline (that .9980 area you pointed out). I’d probably think of going long when it makes a strong break of 1.0000 though… 

      Reply
      • Bryon

        great to hear from you, happypip

        i have call options in an etf, EUO, that shorts the euro, so i am a total bull for the dollar and bear for the euro, but this is a long term trade to be held for a few months at least

        the monthly chart for going long the dollar or short the euro has already signified a trade by broken trend lines on close only charts; when that same confirmation comes into the weekly and daily charts, the trend will gain steam (hey, i could be wrong…but i doubt it)

        i am looking forward to opening a forex acct soon and trading in different time frames, not just long term

        you know what i like about you? you are so nice… and i am nice too
        you know what else? nice guys and gals finish first (at least in our cases)

        let’s make money

        Reply
  3. Bryon

    line close chart trendline analysis, 4 hr period: unless a 4 hr bar closes BELOW .9935, usd/cad won’t get near your buy target anytime soon
    HOWEVER, a 4 hr bar close (close, close, must CLOSE) above .9980 means full steam ahead: higher prices, up, up, and away! (chk the next fib levels for some possible clues)
    i hope you make money happypips!

    Reply
    • Happy Piphappypip Post author

      Thanks for the kind words, @Byron:disqus ! Unfortunately, it doesn’t look like this pair would reach my entry anytime soon. But price hasn’t made a new high yet and it seems to be pulling back. There’s still hope… I think.

      Reply
    • Happy Piphappypip Post author

      Sorry about that! Been trying so hard to wrap my head around what’s going on in the markets lately. But I’m back! :)

      Reply
  4. ascms

    My first ever post.
    I like your setup except that the pr is above the 200 sma, the 62 ema and the 800 sma. To me this shows that the direction of the pr is likely to continue upward.  Now there might be a small retracement, but i don’t think it will be enough to hit your entry point.  That’s just me a newbie. 

    Reply
    • Happy Piphappypip Post author

      Oh, I see. I didn’t really get a chance to look at those SMAs but it looks like my entry order won’t be triggered like you said :( It does seem to have difficulty breaking above .9900 for now, so maybe I’ll wait for another retracement? What do you think?

      Reply

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