Trade Closed: 2010-08-12 2:01
Oh dear, Canadian trade balance figures came in much worse than expected, forcing USDCAD to break past 1.4000. Instead of narrowing to 0.1 billion CAD, Canada’s trade deficit even widened from 0.5 billion CAD to 1.1 billion CAD in June. And, just like that, USDCAD broke above the descending channel and surged towards the 1.5000 handle, hitting my stop along the way.
It didn’t help that risk aversion was at an all-time high yesterday after China printed disappointing economic figures earlier on. In retrospect, I should’ve just closed my trade when Canada’s trade balance was released and locked in those few pips. Or better yet, I probably should’ve gone for the breakout trade, knowing that US dollar strength was the theme of the day.
Total P/L: -62 pips / -1.00%
Trade Idea: 2010-08-11 3:11
Rawr! It’s time for me to go all bearish on the dollar! For the past couple of days the red marks on the US economic reports have been hurting my eyes so I decided to join the bandwagon and watch USDCAD go down! Mwahahaha!!
After all, if analysts were right and biases are really “back to fundamentals,” then selling the dollar is the way to go, right? They’ve been chugging out one bad report after another!
I still have to be careful, though, because eyesores have been popping in Canada’s economic reports, with the drop in employment being the last glaring one. In fact, I only have the better-than-expected housing starts data on my belt. Hmm, I better watch this trade closely then!
I’m also keeping my eye on the upcoming trade balance report from Canada. Their trade deficit is expected to narrow from 0.5 billion CAD to 0.1 billion CAD in June. A better than expected figure could push the Loonie higher against the dollar.
On the technical side, there’s a descending channel on the 4-hour chart of USDCAD. It appears that the pair is climbing towards the top of the channel again but it might probably find resistance at 1.0400 again. I mean, that’s close this week’s and last week’s high, right? So I thought it’d be a good idea to place my short order in that area.
I decided to put my stop above the 1.0400 resistance and above the top of the channel. That way, I’d be out of the trade once it breaks… but hopefully it doesn’t! I set my first profit target at the 1.0300 handle since there seems to be some support in that region. I placed my second profit target at 1.0250.
Here’s what I’ve cooked up:
Short USDCAD at 1.0385, stop loss at 1.0447, pt1 at 1.0300, pt2 at 1.0250.
I’m still pretty bummed out about closing my short AUDUSD trade too early. Did you see how that pair dropped like a rock?! Oh gosh, I hope I get the chance to grab more pips on this USDCAD trade. Wish me luck and don’t hesitate to hit me up on MeetPips.com!