Going Loonie One More Time! – Trade Closed

Trade Closed: 2010-06-23 22:45

PoD Chart

Ouchies. No thanks to the weaker-than-expected Canadian retail sales, the USDCAD broke out of its descending channel and reached a new two-week high. Needless to say, my trade got stopped out.

It looks like one of my readers was right. The setup was a good one, though I should’ve taken profit early or moved my stop to breakeven quickly when price went my way. The pair looked severely oversold on the daily chart, which indicated a strong possible move upwards.

Stopped out at 1.0325.
Profit: -80 pips / -1.0%

According to my MeetPips.com stats, I am up +234 in the last 90 days. If deduct this trade from my stats, the tally will stand be +154. I guess coming out positive is good, though I think I could definitely do better. In any case, stay tuned for more of my trade ideas! Toodles!

Trade Idea: 2010-06-21 22:55

PoD Chart

I took a look at the USDCAD 1-hour chart and noticed that the pair has been moving inside a descending channel for more than a week now. Aside from that, I also saw bearish divergence, with the price showing lower highs and the stochastics drawing higher highs… So I decided to pull the trigger and enter at market!

Besides the price is currently consolidating around the area of interest around the 61.8% Fibonacci retracement level. With the 1.0220 to 1.0240 price levels being an area of intrest in the past, I think it wild continue to hold. I’ve set my profit target a few pips above the recent low of 1.0139 and my stop 80 pips away from my entry. That would place my stop above the psychological 1.0300 handle, above Friday’s high and past the upper bound of the channel.

On the fundamental side, my bias is pretty much the same as my previous trade. The Bank of Canada was the first among the G7 central banks to raise rates, which proves that its economy is doing very well. More than inflation picking up, unemployment in the country has been falling as indicated by recent reports on Canada’s labor market.

The Fed, on the other hand, has pledged to keep rates low for an extended period. This means that the interest rate differential between the dollar and the Loonie will continue to widen, giving me more reason to be bullish on the Loonie.

Since I won’t be keeping this open when the Fed announces its decision on interest rates, I’ll only be concerned with the existing home sales from the US and the consumer price index (CPI) and retail sales report from Canada. If these reports come in below expectations, I just may close early to avoid any risk aversion moves.

Here’s what I did:

Short USDCAD at market (1.0245), stop at 1.0325, pt at 1.0150. As usual, I’m risking 1% of my account on this trade.

I’ve been lacking my beauty sleep as of late, as everyone has been keeping me up with all their shouting and cheering. Since the World Cup only rolls around every four years, I’m being tolerant… for now.

I hope this trade works out for me! Be sure to check out my other trade ideas and post at MeetPips.com!

6 comments

  1. pipsprof.

    Perfect setup happypip, am selling also from 1.0230 but wont stay long on this as there is a big potential inverted heads and shoulder on the daily and weekly charts,which means a bullish correction is on cards very soon,so whatever gains i hav today will be enough.Not much potential going down!!!!!!!!!!Enjoy

    Reply
  2. pipsprof.

    Have swallowed 20pips and am out now.oil is unable to break 200dma and headed down now,so am buying now infact from 1.0220,hope we win!!

    Reply
  3. pipsprof.

    Perfect setup happypip, am selling also from 1.0230 but wont stay long on this as there is a big potential inverted heads and shoulder on the daily and weekly charts,which means a bullish correction is on cards very soon,so whatever gains i hav today will be enough.Not much potential going down!!!!!!!!!!Enjoy

    Reply
  4. pipsprof.

    Have swallowed 20pips and am out now.oil is unable to break 200dma and headed down now,so am buying now infact from 1.0220,hope we win!!

    Reply
  5. pipsprof.

    Oh,sweet good old dollar,have reached my 2nd profit target at 230pips gain,am using a trailing stop of a 150pips cushion from here and possibly target 1.0800 and beyond.A good way to end the week,happypips,Pls ur analysis helps us greatly,we all do lose sometimes,d only lesson i learnt from this trade is the big picture potentials.Cheriooo!!!!!!!!!!

    Reply
  6. pipsprof.

    Oh,sweet good old dollar,have reached my 2nd profit target at 230pips gain,am using a trailing stop of a 150pips cushion from here and possibly target 1.0800 and beyond.A good way to end the week,happypips,Pls ur analysis helps us greatly,we all do lose sometimes,d only lesson i learnt from this trade is the big picture potentials.Cheriooo!!!!!!!!!!

    Reply

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