Happy 4th of July, folks! For those of you who missed the early fireworks in the forex market last week, here’s how USD/CAD ended with a big bang:
Remember that rising channel we were talking about in my Happy Comdoll Corner for CAD pairs the other week? Well, I was able to catch some pips off the bounce from the bottom but I wasn’t able to jump in on that short from the top of the channel.
As you can see from the chart above, the top of the channel held and the pair dropped back to the bottom. Heck, risk appetite was so high last week that USD/CAD had enough energy to break below the bottom of the channel and go for the .9600 mark.
Stochastic was in the overbought zone just when the pair tested the top of the channel, which was a good signal for me to short. Had I waited for enough momentum and shorted at .9900, I could’ve caught a hundred pips just by aiming for the bottom of the channel around .9800.
Even better, I could’ve held on until the pair made a break to the downside and added at .9750, just below the channel. Since I usually close my open trades at the end of the week, I could’ve locked in profits at the .9600 handle.
If I wasn’t so bearish on the Loonie last week, I probably would’ve taken this trade and placed my stop 50 pips above the 1.0000 major psychological level. If I risked 1% on my initial position and risked another full 1% upon adding at .9750, I would’ve bagged a 3% win on this trade. It’s just too bad that USD/CAD was giving me mixed signals last week!
Anyway, I heard some of y’all took some hits on your accounts with long USD/CAD trades. Don’t feel bad, even Pipcrawler lost on this one as well! Let’s all try to get back in the green this week and, if you have any comdoll trade ideas, feel free to post them in my Happy Comdoll Corners:
What Moved the Comdolls Last Week?
Even though Australia, Canada, and New Zealand popped up pretty important economic reports. it was risk appetite that drove the comdolls’ price action for most of last week.
The comdolls started the week on shaky ground as markets stay clear of aggressively buying high-yielding assets ahead of the Greek parliament’s voting for Greece’s austerity measures. A slightly worse-than-expected trade surplus report from New Zealand also provided little support for the Kiwi, while the Loonie and the Aussie also slipped against the dollar.
On Tuesday the markets went gaga for the comdolls like it was a Fourth of July sale when the Greek parliament actually had enough votes necessary to implement new austerity measures and get another bailout package from the EU and the IMF. In fact, appetite for risk was so high that the low-yielding Greenback fell across the board!
The risk-lovin’ market environment continued to support the comdolls for the rest of the week especially when Canada’s CPI renewed talks of another BOC interest rate hike and New Zealand’s building consents and business confidence also surprised to the upside. By the end of the week, USD/CAD had fallen sharply below the .9600 handle, while AUD/USD is safely above 1.0700.
As for potential comdoll movers next week, I heard from some of my friends that hawkish sentiments for the euro might pull other high-yielding currencies higher. On the other side of the moon -I mean the coin – there’s also a possibility that the move up might be overdone and we might see significant retracement.
So what do you think? Will the positive comdoll trend will continue until next week? Don’t be shy to share your two cents on the box below, or even on my @Happy_pip Twitter and Playing with Comdolls Facebook page! I’ll probably read up more on the comdolls just before I sleep later, but for now, I think I want to spend a sunny Sunday afternoon curled up with a good snack and a good book.
Till my best weekly comdoll setup!