Comdoll Weekly Replay (September 12-16, 2011): USD/CAD Parity Play

Best Setup of the Week

Remember that possible parity play I was looking at last week? Well, it turns out I was watching the wrong pair. I planned to buy AUD/USD at 1.0000 when I should’ve been looking at USD/CAD instead!

USD/CAD Parity Play

USD/CAD topped at 1.0000 at the beginning of the week, right when stochastic was in the overbought region. I shouldn’t have hesitated to take a short position in that area, knowing that there were hardly any red flags due from the U.S. or Canada during the first half of the week.

Price action got a little more choppier midweek and it looked like support at the infamous .9850 level was going to hold. However, weak retail sales and PPI figures from the U.S. made the Loonie a lot more appealing than the Greenback. With that, USD/CAD dropped to the .9800 handle and I could’ve taken profits there.

I probably would’ve used a tight 50-pip stop on this setup since I’d want to be out once price breaks above parity. Had I done that and held on until .9800, I would’ve made a 4:1 return on this trade!

Maybe if I had a BFF this week, I would’ve caught this big move. But it has been a little more quiet than usual in my hood lately. C’mon guys! Don’t be shy to share your trade ideas with me through any of these accounts:

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Hope to see you there!

Happy time

What Moved the Comdolls Last Week?

Good morning, friends! I hope you’re having a relaxing weekend because next week is going to be a big one! With the Fed’s FOMC statement only a few days away, traders like you and me would have to be prepared for whatever the markets throw our way. Why not start by replaying what moved the comdolls last week?

The comdolls started the week with uneven footing as USD/CAD rejected parity, AUD/USD lost ground, and NZD/USD capped the day at its open price. Canada and New Zealand had no economic reports due at the time, but Australia showed a weak trade balance report with only a 1.83B AUD surplus in July when markets were expecting a 1.91B AUD figure.

Though the Land Down Under continued to release mixed NAB business confidence and Westpac consumer confidence reports throughout the week, the comdolls in general gathered momentum in the charts. Apparently, the comdoll bulls were cheered by the news that China is interested in helping out the financially-troubled euro zone economies. Not only that, Germany’s Angela Merkel‘s phone conversation with France’s Sarkozy and Greece’s Papandreou also cooled down talks of debt contagion in the region, which helped high-yielding currencies like the comdolls.

reports.png

Still, the positive news from the euro zone weren’t enough to hold off the risk averse for long. Canada’s weak capacity utilization rate, the disappointing retail sales figure from the U.S., and the RBNZ’s decision to keep its rates on hold at 2.50% soon took its toll on the comdolls. As a result, the comdoll pairs’ ranging action continued for a few more days. Of course, it didn’t help that the RBNZ held its rates steady not because of domestic concerns, but because of worries over the global economic recovery.

It was only later in the week when the comdoll pairs finally broke some of its support and resistance lines and strengthened against the Greenback. As my forex friends told me, traders are beginning to take profits on their long dollar positions ahead of the FOMC statement next week. USD/CAD even broke its major support at .9850 after Canada’s foreign securities purchase report showed that foreigners purchased 11.78B CAD worth of securities in July, an improvement from the -3.45B CAD figure in June.

So, what do you think will the comdolls face next week? Aside from the RBA’s monetary policy meeting minutes, New Zealand’s GDP and current account, and Canada’s CPI and retail sales reports, the markets will closely watch the Fed’s FOMC meeting minutes. If the Fed announces another form of QE like many of my friends are predicting, then based on the price action at the time when the Fed announced its QE2 program, the comdolls might be in for more gains!

Any thoughts? Don’t hesitate to give me a holler! You can contact me on one of these links:

@Happy_pip Twitter
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Happy weekend!

Happy time

  • Craig Jc

    Good day Happy Pip! Its a new week and that means new trade set ups!! I am looking to short the AUDUSD from my 50.00% Fib extension @ 1.01806 and targeting 1.01101 (previous support level). Fib extensions taken from the August 11th and the September 1st crests. With analysts saying the RBA will have a dovish tone and cut rates tonight, I am confident my target will be hit! Wish me luck. Drake and Weezy said it the best, “I’m goooin’ in”

    • happypip

      Nice setup, Craig! Since AUD has been kicking my butt lately I’ll probably watch by the sidelines this time. But I’m crossing my fingers for your trade! Good luck! :)

  • Digitalgypsy5720

    It’s time to get it in this week!! ;-)  Let’s do it!

    • happypip

      That’s the spirit! Let’s do it! :)