Risk Aversion Play on USD/CAD – Trade Closed

Trade Closed: 2012-10-04 10:25

As I have told my friends on Twitter, my first position got stopped out when the pair briefly dipped below the .9800 major psychological handle. Boo!

Around that time though, my second entry order at .9800 got triggered and the pair slowly crawled upwards this week.

USD/CAD Trade Closed

Unfortunately for my trade, Canada’s Ivey PMI just came in much stronger than expected and higher than the previous figure. This was enough to push USD/CAD below the .9850 handle. I figured that the selloff would continue for the rest of the U.S. session so I just decided to close my trade manually.

Here’s how it all turned out:

1st position: Long USD/CAD at .9834, stopped out at .9784 (-0.25%)
2nd position: Long USD/CAD at .9800, closed at .9840 (+0.175%)

Overall, I wasn’t able to end up with a win on this trade as I had hoped. So much for closing out Q3 2012 with a win!

But now that I have all the numbers for all my trades in Q3, stay tuned for my Q3 trading results coming up tomorrow! In case you haven’t seen it yet, I have also published my breakdown of the major market themes and comdoll price action for the months of July, August, and September. Check it out!

Trade Update: 2012-09-28 5:25
I’m in… again! Well, my second position is, anyway.

As we had predicted, the Spanish government’s austerity plans was the wildcard event for this week as it gave clues on whether or not Spain will eventually ask for a bailout.

Thanks to Spain’s highly optimistic plans and speculations of Chinese stimulus during the early Asian session, USD/CAD dropped to the .9800 area where I placed my original entry orders.

USD/CAD Second Position

Here’s an update on my open positions:
1st position – entry at .9834, stop loss at .9784
2nd position – entry at .9800, stop loss at .9750

I’m keeping my trades open for now, but I’m planning to move my stop loss to break even as soon as USD/CAD breaks above the all-important .9850 handle.

What do you think? Should I wait for USD/CAD to turn back up, or should I call it a day and close my positions? Your thoughts are much appreciated!

Trade Update: 2012-09-27 9:07
It looks like risk is still off in the markets today as the 38.2% Fib seems to be holding for USD/CAD… and that’s why I decided to enter half of my position at market!

USD/CAD Trade Update

As I was watching the 1-hour chart earlier during the start of the London session, USD/CAD seemed to be finding support at the topmost Fib while Stochastic was crossing upwards from the oversold region. I didn’t want to miss out on the chance to jump in a long trade in case the pair doesn’t dip as low as my .9800 entry price.

So far, I’m not regretting my decision to enter early since my first position is currently in the green. As I mentioned on Twitter, I was able to go long at .9834 with a 50-pip stop below the .9800 major psychological level. Since I was planning on risking at most 0.5% of my account on this trade, I risked half at market and left my original entry order at .9800 with 0.25% risk.

Do you think I made a good decision or was I being too rash? I’d really appreciate your feedback on this one!

Trade Idea: 2012-09-27 2:15

It’s my last trade for the quarter, folks!

Although Q3 hasn’t been too kind to my trades, I’m feeling optimistic that this trade is my lucky one before I say au revoir to the trading quarter.

As I mentioned in my Midweek Market Analysis this week, protests in Spain and uncertainties in the euro zone are keeping the lid on the high-yielding currencies’ rally against the dollar. Heck, traders even ignored a strong retail sales data from Canada!

I believe that unless Spain‘s Mariano Rajoy blows our expectations out of the water with his austerity plans, we’ll continue to see weaknesses in high-yielding currencies like the Loonie.

On the technical side, I have my eyes locked on USD/CAD’s .9800 major psychological handle. Aside from being a former resistance level, it’s also a good spot for a retest of a broken trend line on the higher time frames. But what sealed the deal for me is a possible bounce at the Fib on the 1-hour chart, which is supported by a potential bullish divergence.

USD/CAD Retracement Play

Here’s my plan so far:

Buy at .9800 with a stop loss at .9750 (below the rising trend line on the 1hr chart). I’ll move my stop to BE once price reaches .9850 and start looking for a profit target from there. Be sure to read our risk disclosure if you’re planning to trade with me!

I gotta be careful though, as I heard from my forex friends that speculations on a possible Chinese government stimulus is propping up risk sentiment as well as oil prices. I hope for the sake of my trade that this is only a retracement! In any case, I’ll be watching USD/CAD’s price action closely and see how I can manage my trade better.

What do you think? Is this something that you’d want to trade? Don’t hesitate to give me a shout out!

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Happy time

Other Popular Articles:

What is the STA strategy? Q2 2012 in Review USD/CAD trade Comdoll Trading Kit (September 24-28, 2012)

  • Reza Fahlevi

    I’m with you in risk aversion play. But i play in Sell AUD/JPY, look at its sexy falling channel in 4H chart, anyway why I cant open this cool site in google chrome?

    • happypip

      Welcome to the risk aversion train, Reza! Funny, I’m using Google Chrome right now. Have you tried clearing your cache? 🙂

  • RB

    Some strange US data is making a mess of the USD/CAD haha. Durable goods purchases down, which I believe to be a better indicator than unemployment claims.

    I’m with you still holding a risk aversion long from .9820. Some consolidation above .9850 could mean some further upside (reversal maybe?). Speculating on Chinese stimulus (going short) could be a pretty huge move too though; and .9850 has been some strong support before… hmmm decisions.

    • happypip

      Thanks for your two cents, RB! I appreciate it! You’re right about the .9850 handle being a strong resistance. In fact, sometimes I think it’s more significant than parity. Let’s see if we can get the bulls to break above the level today. Fingers crossed! 🙂

      • RB

        A bit more risk on today. .9800 buys are in now, but I’m not totally confident in longs with the positive turn in market sentiment. Hard stops at .9750 haha

  • Spiperman

    I entered short @ 0.985 yesterday since after that level was broken it hasn’t been tested yet as resistance, plus Oil held the 90 lvl + the 100DMA… Well, one of us is gonna be right either way! 😛

    • happypip

      Looks like .9850 is still holding, but USD/CAD is stuck above .9800 still. Where is your target?

      • Spiperman

        My initial limit was @ .97, but I closed the position @ +25 pips cause it was going nowhere… There seems to be a real fight @ these levels so I chose to protect some profits & stay flat until the market picks a direction for me! 😉

        • happypip

          Good for you, you were able to catch a win! 🙂

  • fxsniper

    usdcad destination 0.9400 before I begin to long. Certainly won’t place a long order at that price of yours. strong resistance zone

    • happypip

      I was hoping it’d break though. Let’s see how it goes!

  • RB

    US and Canadian news shouldn’t be good for the longs… yet she goes up. I’ll take it!

    • RB

      Good Canadian RMPI and US PMI. I’m out of my longs at .9815.

      Feels like a risk-on type of week and the .9850 has held again.

      • RB

        Not to mention the daily chart is bumping up against the top of the bear channel and the 4h seems to have developed a nasty double top at the .9850 resistance.

        • happypip

          Yikes! Thanks for the heads up!

          • RB

            Pulled the plug too early!! Bleh! haha.

            Did you take profit when it bump up against the .9890 resistance? .9850 should act as support now. Although the looming bond buying “has” to put a bit of downward pressure on the USD I would think… hmmm. I’m still out for now.

          • RB

            As I wrote that it dropped 30 pips through the .9850 support… doh!

          • happypip

            D’oh indeed! I had to exit early when the Ivey PMI came out strong.

      • happypip

        Looks like you’re right about that! Let’s see how the recent RBA decision affects this pair though…

  • bygjj

    Im with you long since 97.4. Im already at BE.

    • happypip

      Good for you! Still stuck around my entry price 🙁