Doji and Divergence on USDCAD? – Close Trade

Close Trade: 2009-09-03 11:27

My trade was triggered not too long after I posted my trade idea, but since then, USDCAD has pretty much gone no where this week! With the end of the European trading session closing down and the NFP reports coming tomorrow, I have decided to close my trade and take a very small loss.

Closed open short position at 1.1061

Total: -41 pips/ -0.34% loss

So, a small loss for the week, but I expect to make it back once liquidity starts returning to the markets next week as traders come back from vacation. Stay tuned and for those thinking about trading the NFP report tomorrow, be very, very safe! Good luck and thanks for checking out my blog!

Trade Idea: 2009-09-01 22:00

comdollsff

Good evening Forex friends! I’m checking out the charts on USDCAD and it looks like there are signs the pair may swing back lower and stay in its range. Can I catch some quick pips to the downside?

I have the four hour chart up on USDCAD and there’s quite a few things happening here indicating this pair may swing lower in the short term. First, the pair is retesting the rising trendline that was broken last week – will it hold as resistance? Well, it may hold and we see stochastics moving lower our of overbought territories on both the 4-hour and 1-hour chart indicating buyers are running out of juice. The biggest indication of a possible swing is the bearish divergence as price has made higher “highs” and the stochastic is making lower “highs.” So, there are signals of a possible swing lower and probably a retest of the rising trendline drawn on the chart. Lastly, the previous bar on the 4-hour chart looks like a doji candle, indicating indecision and possible move back lower.

Fundamentally, we do have a flood of data on the Forex calendar from the US to push this pair around with some quick volatility, especially with the continued low liquidity summer conditions. Challenger job cuts and ADP employment change could have a short term affect on this pair, so I may be quick to adjust this trade if I am in it.

This pair does continue to have a strong correlation with oil movements, and with the beating the “black gold” has taking over the past couple of trading session, it may rebound and help boost the Loonie in the short term.

I am going to short below the previous bar’s low and target the previous support level around 1.09 and beyond. My stop will be a bit less than the daily average true range of 140 pips. Here’s what I am going to do:

Short USDCAD at 1.1020, stop at 1.1140, pt1 at 1.0900, pt2 at 1.0800

Remember to never risk more than 1% of a trading account on any single trade. Please adjust position sizes accordingly.

Stay tuned for updates and thanks for checking out my blog!

  • cadarkitek

    I like this call as I just went short myself. My entry is base on the trend line break and test. It seems we might have a crown/H&S.

  • cadarkitek

    I like this call as I just went short myself. My entry is base on the trend line break and test. It seems we might have a crown/H&S.

  • pipsprof.

    This is not a good call at all, oil is down and stocks are making new lows,definately usdcad is very bullish,it is moving up with d USDollar index strenghtening.Beta to get out now when u still hav the opportunity with a smaller loss.

  • pipsprof.

    This is not a good call at all, oil is down and stocks are making new lows,definately usdcad is very bullish,it is moving up with d USDollar index strenghtening.Beta to get out now when u still hav the opportunity with a smaller loss.

  • peej

    I have been following this pair since Happy Pip’s previous trade on USD/CAD. I have an Andrews Pitchfork drawn with a median line that is very similar to Happy Pip’s trendline. The fork is pointing up. Andrews pitchfork rules generally say if the pair does not reach a median line it will reverse and go the opposite direction. The USD/CAD is in exactly this position now. Pipsprof – your observations are correct but this is a classic situation where everything is pointing to buy so that is exactly where you should sell. Equities can turn and oil can turn quickly the other direction. To me the timing seems almost right on. News on Thur and Fri will surely do something to the market. The direction is all we wait for now. I agree with the short position. All markets seem to be setting up nicely for NFP/Labor day “reversals”. Simply because thats the way the big players like it hehehe.

  • cadarkitek

    Hey pipsprof my short was taken strictly on Technical Analysis by the system I trade. Its not a good call in your view but I beg to differ.

  • pipsprof.

    cadarkikek,peej,so many support 4 my view,price have successfully closed above the 50 SMA on the H4 chart,Stocks and oil continue thier downward trend,s&p goin below 1000 mark,the technical factors alone cannot support this pair.All the other markets will give support to the Dollar.I am long usdcad from 1.0900 and hope to take profit at 1.1170 or there about.NFP will be the ultimate tie breaker, I hope u are already short now so we can see what the market will have 4 us.Hoping we all win,Hahahaha!!!!!!!!!

  • pipsprof.

    cadarkikek,peej,so many support 4 my view,price have successfully closed above the 50 SMA on the H4 chart,Stocks and oil continue thier downward trend,s&p goin below 1000 mark,the technical factors alone cannot support this pair.All the other markets will give support to the Dollar.I am long usdcad from 1.0900 and hope to take profit at 1.1170 or there about.NFP will be the ultimate tie breaker, I hope u are already short now so we can see what the market will have 4 us.Hoping we all win,Hahahaha!!!!!!!!!

  • peej

    I have been following this pair since Happy Pip’s previous trade on USD/CAD. I have an Andrews Pitchfork drawn with a median line that is very similar to Happy Pip’s trendline. The fork is pointing up. Andrews pitchfork rules generally say if the pair does not reach a median line it will reverse and go the opposite direction. The USD/CAD is in exactly this position now. Pipsprof – your observations are correct but this is a classic situation where everything is pointing to buy so that is exactly where you should sell. Equities can turn and oil can turn quickly the other direction. To me the timing seems almost right on. News on Thur and Fri will surely do something to the market. The direction is all we wait for now. I agree with the short position. All markets seem to be setting up nicely for NFP/Labor day “reversals”. Simply because thats the way the big players like it hehehe.

  • cadarkitek

    Hey pipsprof my short was taken strictly on Technical Analysis by the system I trade. Its not a good call in your view but I beg to differ.

  • pipsprof.

    cadarkikek,peej,so many support 4 my view,price have successfully closed above the 50 SMA on the H4 chart,Stocks and oil continue thier downward trend,s&p goin below 1000 mark,the technical factors alone cannot support this pair.All the other markets will give support to the Dollar.I am long usdcad from 1.0900 and hope to take profit at 1.1170 or there about.NFP will be the ultimate tie breaker, I hope u are already short now so we can see what the market will have 4 us.Hoping we all win,Hahahaha!!!!!!!!!

  • pipsprof.

    cadarkikek,peej,so many support 4 my view,price have successfully closed above the 50 SMA on the H4 chart,Stocks and oil continue thier downward trend,s&p goin below 1000 mark,the technical factors alone cannot support this pair.All the other markets will give support to the Dollar.I am long usdcad from 1.0900 and hope to take profit at 1.1170 or there about.NFP will be the ultimate tie breaker, I hope u are already short now so we can see what the market will have 4 us.Hoping we all win,Hahahaha!!!!!!!!!

  • Johnnypipex

    I played this signal as well; luckilly I was on live when it triggered and managed to scrape a few pips out of the deal before it went sour.

  • Johnnypipex

    I played this signal as well; luckilly I was on live when it triggered and managed to scrape a few pips out of the deal before it went sour.

  • cadarkitek

    Pipsprof this was another good winner. I will be closing 75% of my entry ahead of the NFP readings to protect my gains(up over 100pips).

  • happypip

    Thanks for the comments everyone! Looks like I missed out on my own trade idea, but I’m glad to see some have taken it and traded it their own way to profits! I always enjoy the input! Keep’em coming and have a wonderful weekend everyone!

  • cadarkitek

    Pipsprof this was another good winner. I will be closing 75% of my entry ahead of the NFP readings to protect my gains(up over 100pips).

  • pipsprof.

    I got out on thursday @1.1055, thats a 155pips gain 4 me. Am not a news trader,so i like protecting my gains ahead of time.I guess we all won.I hope to buy usdcad again from the bottom nxt wk.Thanks Happy pip,You know this is a very treacherous market and this summer vacation is muddling things up 4 us breakout traders,as all the pairs are in ranges.Thanks

  • happypip

    Thanks for the comments everyone! Looks like I missed out on my own trade idea, but I’m glad to see some have taken it and traded it their own way to profits! I always enjoy the input! Keep’em coming and have a wonderful weekend everyone!

  • pipsprof.

    I got out on thursday @1.1055, thats a 155pips gain 4 me. Am not a news trader,so i like protecting my gains ahead of time.I guess we all won.I hope to buy usdcad again from the bottom nxt wk.Thanks Happy pip,You know this is a very treacherous market and this summer vacation is muddling things up 4 us breakout traders,as all the pairs are in ranges.Thanks

  • aristolholy

    why some of the candle at this chart are different from my chart? ( i use metatrader, same TF 4 hour), sorry for my noob question, iam really new on this -_-, thx

  • aristolholy

    why some of the candle at this chart are different from my chart? ( i use metatrader, same TF 4 hour), sorry for my noob question, iam really new on this -_-, thx

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