Long USD/CAD: Playing the Major Support – Trade Closed

Trade Closed: 2011-08-23 7:20

USD/CAD Consolidation

After days of watching USD/CAD closely, I finally closed my winning trade! I didn’t get to keep all of my gains though. Just when I was thinking of taking profits early ahead of Canada’s CPI report, the pair dropped down below .9900. It wasn’t enough to hit my adjusted stop loss just yet, but I decided to hold on to my trade anyway.

Too bad my attempt at playing the news report didn’t pay off by as much as I hoped! Canada’s core CPI came in at a 0.2% growth in July, which is in line with market expectations and a bit better than June’s 0.6% decline. The positive news was not only enough to trigger my adjusted stop loss at .9880, but it also went back down to the .9850 support.

Because of that, I lost 0.5% on my third position, ended up breakeven on my second, and pocketed a 0.68% gain on my first one. That’s a teeny 0.18% boost for my account, but I’m still happy about it.

As much as I regret not getting all of my profits, I still believe that adding on to my position was a good idea at the time. As for my exit strategy… well, I can work on that on my next trades.

How else could I have played this trade to get more pips? Any ideas?

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Hope you’re still with me on my next trade!

Happy time

Trade Update: 2011-08-19 1:00

Woohoo! So this is what a winning trade feels like! I’m up by more than a hundred pips on this USD/CAD and I don’t want to jinx it. I already added a couple of positions during the U.S. session, one at .9880 and another at .9930. To protect my profits, I also adjusted my stop to .9880 so I’ve got about 0.6% locked in just in case it falls back to my stop. Not bad, eh?

USD/CAD - Pressing Advantage

As planned, I kept a close eye on my open trade for almost the entire U.S. session, waiting for signs to either exit early or press my advantage. Fortunately for me (and unfortunately for the higher-yielding currencies), risk aversion loomed over the markets when Morgan Stanley announced a downgrade in global growth forecasts and pointed out that the U.S. and Europe are dangerously close to a recession. And when U.S. economic data (existing home sales and Philly Fed index) both missed expectations, the markets just went wild!

For now, it seems that the frenzy has died down a bit, probably because U.S. traders had to hit the sack while London traders haven’t had their morning coffee yet. However, we might just see the safe-haven rally carry on during today’s London session. As I mentioned in my tweet, gold is steadily climbing to new highs even though it’s just the Asian session and we might see more of that later on.

Do you think I should hold on to this trade until parity? Or should I just pocket my winnings right now? Let me know what you think through the comment box below or through any of these:

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Talk to ya in the London and the U.S. sessions!

Happy time

Trade Update: 2011-08-18 8:47

Aaaand I’m in!

Yesterday’s round of dollar-weakness provided me the opportunity to get triggered at the .9800 handle support that I was eyeing. As you can see from the chart, the pair dropped to the .9775 area before it bounced back up a bit. It missed my stop loss by 25 pips so I’m still in! Woot!

USD/CAD Breakout

I still have to watch this closely trade though. Some of my friends are pointing out in our discussion below that USD/CAD has been making lower highs, and that I need more confirmation on the potential support area. That’s why today I’m watching the news with you guys!

At around 12:30 pm GMT, we saw that Canada’s leading index report and wholesale sales came in below consensus. As I mentioned in my latest tweet, I’ll be holding on to this trade but moving my stop to breakeven.

A part of me thinks that I should add to my position and press my advantage. However, I’m still on the fence because the U.S. still has a couple of reports (existing home sales & Philly Fed index) due in a few hours. What do you think would be a good strategy for today?

Can’t wait to hear what you guys think!

Happy time

P.S. You know where to catch me:
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Trade Idea: 2011-08-17 6:13
Good day, everyone! How’s your trading going so far? As for me, I’m hoping to score a big win with this week’s swing trade idea. As you probably know, I’ve gotten the “Swing Trader” result on the “Which Trading Style is Best for You?” personality quiz so I’m sticking with that!

As Big Pippin pointed out in his Daily Chart Art today, there’s a descending triangle on USD/CAD’s 1-hour chart and the bottom of the triangle looks like a really strong support level. I’m planning to go long at that level because it lines up with last week’s low and the bottom of this week’s average range. On top of that, it’s also very close to the .9800 major psychological handle. That should hold, right? Here’s a chart of the descending triangle on the 4-hour chart:

USD/CAD Major Support

Of course, it also depends on the Canadian and U.S. reports set for release in the next few days. Based on the economic calendar, we have the Canadian foreign securities purchases due today and this could show a decline in demand for Canadian assets.

If the actual figure shows a drop from 15.40 billion CAD to 10.33 billion CAD as expected, it would most likely be bearish for the Loonie. I’ll also be keeping a close eye on the Canadian CPI data due Friday. Both core and headline figures could print 0.2% upticks but, if they fall short of expectations, we could see a huge Loonie selloff.

As for the U.S., they are also set to release their inflation data this week. However, this probably won’t have much of an impact on dollar pairs since the Fed isn’t really worried about inflation. What could rock the Greenback and risk sentiment are the existing home sales figure and the Philly Fed manufacturing index. I have a hunch that weak data could spur risk aversion and trigger more dollar buying, but who knows? I’ll just make sure I’m in front of my computer during those releases so I could make the necessary adjustments to my trade.

Here’s my plan:

Long USD/CAD at .9800, 50-pip trailing stop initially set at .9750, ultimate PT at parity. I’m initially risking 0.5% on my first position but I plan to add another position in case USD/CAD breaks above the top of the descending triangle. If that happens, I’ll add every 50 pips and keep trailing my stop.

I know I shouldn’t count my chickens before they hatch but, if all goes according to plan, I could score a 10:1 win on this swing trade. With my 0.5% risk per position, that sums up to a 5% gain on my account, more than enough to erase my recent losses. Keep your fingers crossed for me, will ya?

And don’t forget to hit me up through any of these accounts!
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See you around!

Happy time

31 comments

  1. Craig_FX

    Great trade set up again Happy Pip. Too bad you weren’t able to keep all of the profit on this one. The only thing I can think of that may have helped to retain some additional profit is having tighter stops when adding multiple positions to your trade. Hind sight is 20/20 

    Reply
    • Happy Piphappypip Post author

      Hahaha, I managed to catch a nice entry and news reports just boosted it all the way up. It’d be really perfect if it goes all the way up to parity! Thanks @b3c55d2d9e0ad7655f54d77cd4a7673d:disqus 

      Reply
  2. Ilya Gruntal

    Same for me, Pip. It takes a lot of courage to take your profit, when u’re holding to a winning trade. I noticed, that if I ever hesitate, or think about taking my profits – I MUST DO IT, immidiatley (spelling fail)!
    99% of cases i was hardly regreting not to take the profits.

    Damn it’s ranging nowadays… :)
    Funny thing is, when im buying the dollar and making profits i can be sure stock markets are falling without watching indexes, that makes me smile in wierd way… On the opposite i’ve learned to chart SP500 for bigger picture on my dollar positions…

    Thank you for your post, i’ve made nice pips without adding to position, and closed early! It was awesome.

    Reply
  3. Fxandme

    USDCAD is making lower highs, which makes me think opposite. I will be more comfortable shorting this  pair. Anyways .. all the best for your trade

    Reply
    • Happy Piphappypip Post author

      Thanks for your tip! It looks like it broke below .9800 for a while, but for now I’m keeping my fingers crossed that it will go back to at least the falling trendline resistance. Do you have short positions on this one? :)

      Reply
  4. Craig_FX

    Great Trade Happy Pips! I should have taken a long position @ 9800 as well. I will join you on the next trade set up!

    Reply
  5. HotForex Canada

    Hello,

    Usually, descending triangles signal bearish movements… so I would watch out on longing the pair. 

    Good luck either way!

    Reply
    • Happy Piphappypip Post author

       Thanks! I am pretty careful on this one as it is still forming a descending triangle, but a lesson on the School of Pipsology also pointed out a possible upside break. Hope it breaks up in this case! Oh, and good luck on your trades too! :)

      Reply
  6. clertor

    Hi Happy,
    I like your trade idea but as someone else said I would wait for a brake of the trendline to the upside and buy on a retest of it.
    Of you are looking to secure 50 pips inside the triangle it might work out too, but, then again, it might not.
    good luck with your trade.
    clertor

    Reply
    • Happy Piphappypip Post author

      I guess that all depends on the US and Canadian reports tonight, huh? I do hope it breaks out to the upside, but I’ll move my stop to entry right before the release of those reports, just in case. 

      Reply
  7. Digitalgypsy5720

    Great trade setup!!! Hopefully you will be able to add a position…if you didnt already.  Keep it up :-)
    Peace
    aka elgitano5720

    Reply
    • Happy Piphappypip Post author

      Yep! I was able to add at .9880, after waiting for a strong break of this week’s open price. Thanks @7425b749a096cee64ca338e1dc2a6482:disqus :)

      Reply
  8. Bryon

    good luck. i always try to remember: “confirmation” which in this case would’ve been an actual close above that upper trend line; but i go in early too, often to my disappointment

    got out of my short euro trade, by the way; Chinese buying it up like crazy

    Reply
    • Happy Piphappypip Post author

      Yeah so I heard. No use fighting China this time. I’m trying to pick a bottom at .9800, but I also plan on taking half of my profits if it reaches .9850 just in case the trendline becomes too strong a resistance. :)

      Reply
    • Happy Piphappypip Post author

      Yay, someone else is with me on this one! Where did you place your stop loss? Did you get hit by the dip to .9775 a few hours ago? 

      Reply
  9. Foricks

    Hey Dol,
    I like this one and have been in it since yesterday.  While I almost got stopped out this morning (by 0.00008 pips -Yikes!) I am still in.  Based on your and PipDaddy’s insight, I am adjusting my trade a little.  I like the way you are planning to add in as the trade evolves.  If the 62% fib holds on the 4hr, I think you might be onto something…good luck!

    Reply
    • Happy Piphappypip Post author

      Yikes, that was a really close one! Glad to know you’re also looking at the 4hr. What’s your swing low for your Fib btw? I’m only seeing 38.2% and 50% on mine. Also, how do you plan on adjusting your trade? I might get a few tips :D

      Reply
      • Foricks

        While I may have my fib upside-down, the first mark of my retracement was what I was referring to (62% = 9775)  I added a little more wiggle room to get through the morning news vascilations (stop below lower part of triangle @9750).  Since we made it through what looks like a “head-fake” – chopsticks in the past two 4hr candles, we may get the breakout to the upside and I can adjust the stop back to 9774.  My TP is 9925.

        Reply

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