Trade Closed: 2009-09-29 16:13
Good afternoon everyone! No luck on the second half of my trade as the pair did trend higher at the start of this week, but USDCAD was a few pips shy of hitting 1.1000. I didn’t get to adjust my stop before the pair fell 200 pips lower on yesterday’s rally in the Loonie, and the second half of my position was stopped out at break even.
1st Half: +100 pips
2nd Half: +00 pips
In retrospect, I was probably a little too anxious to take initial profits, and then a little hesitant to take further profits off of the table. Remember, that support and resistance are “areas” and not exact levels. It’s always a constant adjustment of where and when to exit trades because of this, and next time I’ll just have to pay a bit more attention to price action rather than waiting for specific levels to be hit. Lesson learned!
The return to 1.0800 may be temporary as it seems there were plenty of buyers ready to go long as we saw a quick turn higher and back to 1.0900. If not temporary, then we may see range bound action until NFP, or unless we see a surprise in GDP from both the US and Canada. I think I’ll hang out and watch these events, and if I do re-enter, it will be on a day trade and not anything longer. Stay tuned!
Trade Adjustment: 2009-09-24 15:09
What a day for the Greenback! An unexpected drop in existing home sales brought on risk aversion and some fierce USD buying in the markets. USDCAD rallied up to my buy orders at 1.0800 and beyond!
The pair narrowly missed my first profit target at 1.0950 by a few pips during the afternoon US trading session, and with the end of the week approaching I decided to take some profits off of the table and create a risk free trade.
Closed half position at 1.0900, adjusted stop on remaining position to break even at 1.0800. Will continue to target 1.1100, and trail stop by 100 pips along the way.
So, the chart patterns worked this time, and with my stops adjusted, now I can just sit back and see where the markets take me. Stay tuned!
Patterns Galore in USDCAD: 2009-09-23 17:13
Good afternoon! It’s “patterns galore” in USDCAD, and it looks like the Loonie may be running out of steam against the Greenback. Time for a reversal?
That’s a hard question to answer, and as always I just try to play what the market tells me rather than trying to forecast the future. Here’s what the 4-hour chart is indicating. First, I have drawn out two chart patterns: an inverted head and shoulders and falling wedge. These are reversal patterns indicating the market may move higher. There is a bonus signal on the daily chart as regular bullish divergence is formed with a lower low in price and higher low in stochastics. Take a look for yourself!
A quick look at fundies, and it looks like the Fed made no changes to interest rates in the US as expected and signaled that rates will stay that way for some time. The Fed also extended the purchases of mortgage-backed securities and housing agency debt by three months. This should put the USD under pressure, but the Greenback rallied after today’s Fed announcement against most other currencies, equities, commodoities. Oil, which has a strong price correlation to the Loonie, broke to the downside and ended the day down around 5% at $68/barrel. Are the markets tired of the short USD trade? Have the markets been pricing in this outcome for so long that its time to take profits?
For the rest of the week, economic influences may come from the US, as Canada is void of any major data. US jobless claims, home sales data, and durable goods data should provide some volatility for the pair the rest of the week.
So, I will go long based on technical patterns. My entry point is on a clean break above the falling trenline at 1.0800. My stop is 150 pips, below the recent “low” and more than the daily average true range of 125 pips, to give me room to breathe and hopefully let this trade go my way. I will target 1.11 and beyond, and hopefully take profits along the way. Here’s what I am going to do:
Long USDCAD at 1.0800, stop at 1.0650, pt1 at 1.0950, pt2 at 1.1100
Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.
Stay tuned my friends!