Comdoll Weekly Replay (Feb 21-25, 2011)

Hi again, friends! Since I’ve been getting a lot of positive responses on my last Comdoll replay, I decided to do another one this week! Before I head to my yoga class, here’s my two cents on the economic events that moved the Comdolls this week, plus my totally cool setup on the 4-hour NZD/USD chart.

As I mentioned before, I’m doing these replays to improve my trading performance. I haven’t really been filling up my pip pockets lately (even though I’ve already passed up a lot of shindigs), so I hope that this exercise can point me to the right track. You see, by reviewing a few good Comdoll setups, I might have a chance at knowing how to maximize my profits the next time I see those patterns.

But I also have to stay on top of my economic news! After all, a trader can’t have too many information, right?

What moved the Comdolls this week?

Unlike its other Comdoll friends, the Loonie started the week on a positive note as it was supported by rising oil prices resulting from Middle East tensions. No major economic report was released on Monday, but somehow USD/CAD was near its three-year lows.

NZ house

On Tuesday my poor Comdolls took a huge hit on a heavy round of risk aversion as New Zealand was hit by a 6.3 magnitude earthquake. My friends from New Zealand told me that though the quake was weaker than the 7.0 magnitude earthquake in September last year, its damage on Christchurch, New Zealand’s second biggest city, was more severe. In fact, rumors of a credit rating downgrade and an interest rate cut even started spreading in markets! Meanwhile, Australia’s business confidence report also slipped from an index number of 9 to 5 in the fourth quarter, while Canada’s retail sales surprisingly declined by 0.2% in December.

Good thing the Comdolls got a breather later in the week when markets started selling the Greenback like it’s bake sale. The U.S. popped out worse-than-expected reports, which motivated traders to seek refuge in other currencies even though risk was still on in markets. Of course, it also helped that commodity prices were still climbing the charts with oil prices tipping above the $100/barrel mark. This trend continued until the end of the week where USD/CAD closed well below its three-year lows, and AUD/USD ended the week just below the 1.0200 handle.

While I give happy snaps to the Loonie and the Aussie though, I still award my best Comdoll setup of the week to the Kiwi.

NZD/USD falling channel

This week NZD/USD bounced obediently along a descending channel on the 4-hour chart and sported a few good Fib setups. For one, the 50% Fib retracement lined up nicely with an overbought Stochastic signal, as well as the week’s open price, previous week high, and the major .7650 handle. If I had shorted the pair at the handle with a tight 50-pip stop above the 61.8% Fib and my first PT set at the previous low, I would’ve gained a 3:1 reward-to-risk trade and at least 150 pips!

Then, I could’ve added to my position as soon as I spotted another good Fib setup. You see, I drew another set of Fib lines and I found another good spot in the 38.2% Fib. The level is lining up with last week’s low and the bottom weekly average true range, as well as another overbought Stochastic signal. Hmm, maybe I can take this trade for real next week!

What did I learn from this could’ve been profitable trade?

Much like last week, previous week’s highs and lows and psychological handles played huge parts in this pair’s retracement. I noticed that a retracement trade idea would be much more valid if it was supported by Fibs, chart patterns, and even average true range. Also, I found that it wouldn’t hurt to pay attention to Stochastic especially when a pair is bouncing nicely to a pattern like a descending channel.

Whew! That’s it for my replay this week! Hope you learned a few nuggets from it!

By the way, thanks a bunch for your comments on my trades last week! It really helped me a lot in spotting good Comdoll setups. If you have any more ideas you want to share, or questions you’d like to ask, don’t hesitate on hit me up on the box below, or reach me through my Happy_pip Twitter account or the BabyPips Facebook page.

All right, it’s time for yoga! Till next week!