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

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!