Shifting My Stance on the USDCAD – Target Hit

Trade Closed: 2010-05-20 22:52

PoD Chart

Finally! Thanks to risk aversion spurred by the usual debt contagion fears, the USDCAD zoomed all the way up to my profit target at 1.0700. It seems that the Loonie got badly hit yesterday despite the strong economic reports from Canada. Apparently, global debt concerns could force the BOC to delay its rate hike much further and the Loonie was clearly unhappy with this… Unlike me!

Closed first position at 1.0342: +148 pips
Closed second position at pt2 (1.0700): +506
Total: +327 pips (avg) / 2.27% gain

Trade Update: 2010-05-16 22:31

PoD Chart

Yipee! Looks like my USDCAD trade is paying off! Things looked bleaked for awhile, as the pair dipped to 1.0111 early last week. Then, come Friday, risk aversion spiked up on euro zone debt fears again, which took the pair all the way up to the 1.0400 handle.

With the pair failing to close above the 38.2 Fibonacci level, stochastics showing overbought conditions and the weekend coming up, I decided to close half my position at 1.0342 late last Friday to lock in some profits.

Even though price is now above the 1.0400 mark, I think it was the right move. For the past couple of weeks, the markets were shocked over news from the weekend and I didn’t want to expose my whole position to that.

For now, I’ve moved my stop loss to my entry price at 1.0196 to create a risk free trade. I’m going to let the remaining position ride in hopes that my ultimate target at 1.0700 gets hit! Stay tuned!

Trade Idea: 2010-05-11 23:36

PoD Chart

With the recent run in risk aversion, I have shifted my view to a more pro-dollar stance. I believe that we’re in the midst of a sentiment change, and that the USDCAD has possibly reached a temporary floor around parity. I mean, the latest Canadian jobs report showed its biggest rise in employment ever, yet the Loonie hardly found some buyers. Could this mean that there are no more CAD buyers out there? We could be in for a huge retracement, given how deeply oversold the USDCAD has been on the longer time frames.

Today’s economic calendar presents very little event risk, so I don’t suspect any breakout moves. But I am still keeping a close eye on the trade balance coming out from both the US and Canada. If they come out with contrasting results, it could pull the USDCAD strongly in one direction.

Looking at the USDCAD 4-hour chart, I noticed that the pair is sliding back towards the broken falling trend line, possibly to make a retest before heading higher. Aside from that, there’s a rising trend line connecting the lows of the price and the pair is moving closer to that trend line. Hopefully it’ll bounce upon reaching that area. Also, the price just made higher lows while the stochastics showed lower lows… That’s a hidden bullish divergence right there! I decided to go long at the current market price of 1.0194, setting my first take profit point at this week’s high at 1.0440 and my ultimate profit target near last week’s high of 1.0174. I set my stop around 150 pips away from my entry to give my trade some room to withstand some wild swings.

Here’s what I’m gonna do:

Long USDCAD at market (1.0194), pt1 at 1.0440, pt2 at 1.0700, stop loss at 1.0050.

Hopefully this trade works out nicely for me. I don’t want to get stressed out and start pigging out on sweets and soft drinks! I’m trying to cut back on sugar, which is really tough for me since I have such a sweet tooth! But like I said last week, it’s time to get in shape! Here’s to a healthier lifestyle!

18 comments

  1. kanakzz

    I am not sure if this will work out. If you noticed CAD dropped nearly 200 pips in few hours before the employement news came out…(which really made me think of some leak).. moreover NFP was there in the next hour, which might prevented some movement.
    I feel its going for the parity again.( i might be wrong :-))

    Good luck with your trade :-D

    Reply
  2. kanakzz

    I am not sure if this will work out. If you noticed CAD dropped nearly 200 pips in few hours before the employement news came out…(which really made me think of some leak).. moreover NFP was there in the next hour, which might prevented some movement.
    I feel its going for the parity again.( i might be wrong :-))

    Good luck with your trade :-D

    Reply
  3. Babysteps

    Hi
    I have 2 things to tell
    1- Agree with u, We might start 5 wave to up but i still waiting confirmation

    2- If I’m sure oil will drop should i Start Long u/cad or there is no much correction now on the market as i think??

    Looking forward to your reply
    Keep the great work
    Thanks

    Reply
  4. Babysteps

    Hi
    I have 2 things to tell
    1- Agree with u, We might start 5 wave to up but i still waiting confirmation

    2- If I’m sure oil will drop should i Start Long u/cad or there is no much correction now on the market as i think??

    Looking forward to your reply
    Keep the great work
    Thanks

    Reply
  5. CianQ

    With 5 waves down on the Dow and Oil looking oversold I’d probably look to exit this USD/CAD long for now for the 150 pip profit. I’m not so sure it’ll push on.. in the near term at least. Prefer trades in the 1-3 days timeframe myself I guess.

    Reply
  6. CianQ

    With 5 waves down on the Dow and Oil looking oversold I’d probably look to exit this USD/CAD long for now for the 150 pip profit. I’m not so sure it’ll push on.. in the near term at least. Prefer trades in the 1-3 days timeframe myself I guess.

    Reply
  7. Happy Piphappypip

    @kanakzz – I caught a nice break on this trade. The pair dipped about 80 pips from my entry price, but now I’m up. It’s a good thing I placed a wider stop on this trade.

    Reply
  8. Happy Piphappypip

    @ babysteps – yes, oil is dropping, but I think what’s dominating the market right now is risk aversion. All those strong down moves in the EURUSD has resulted in strong dollar buying, which has helped it across the board, even against stronger currencies like the CAD and AUD.

    Reply
  9. Happy Piphappypip

    @ CianQ

    I decided to close half my position at 1.0342, locking in almost 150 pips. I wanted to limit the risk of my position heading into the weekend. I’ve moved the stop of my remaining position to my initial entry point, so now I’ve got a risk free trade on. I hope it keeps moving higher!

    Reply
  10. Happy Piphappypip

    @kanakzz – I caught a nice break on this trade. The pair dipped about 80 pips from my entry price, but now I’m up. It’s a good thing I placed a wider stop on this trade.

    Reply
  11. Happy Piphappypip

    @ babysteps – yes, oil is dropping, but I think what’s dominating the market right now is risk aversion. All those strong down moves in the EURUSD has resulted in strong dollar buying, which has helped it across the board, even against stronger currencies like the CAD and AUD.

    Reply
  12. Happy Piphappypip

    @ CianQ

    I decided to close half my position at 1.0342, locking in almost 150 pips. I wanted to limit the risk of my position heading into the weekend. I’ve moved the stop of my remaining position to my initial entry point, so now I’ve got a risk free trade on. I hope it keeps moving higher!

    Reply
  13. Babysteps

    Hi
    My question was is still strong correction between oil and cad or not??
    Oil price was 76 when i asked this question and u/cad 1.02!!

    Reply
  14. Babysteps

    Hi
    My question was is still strong correction between oil and cad or not??
    Oil price was 76 when i asked this question and u/cad 1.02!!

    Reply
  15. Happy Piphappypip

    @ babysteps

    I do believe that the correlation is still strong, but right now, the markets are focusing on risk sentiment. As I said in my update, traders have become more risk averse, but because there is speculation that the ECB may intervene into the markets to buy the euro and keep it from weakening, traders have decided to unwind their positions on other higher yielding currencies.

    As a result, the commodities have taken a hit, with the CAD, AUD and NZD all dropping this past week.

    Reply
  16. Happy Piphappypip

    @ babysteps

    I do believe that the correlation is still strong, but right now, the markets are focusing on risk sentiment. As I said in my update, traders have become more risk averse, but because there is speculation that the ECB may intervene into the markets to buy the euro and keep it from weakening, traders have decided to unwind their positions on other higher yielding currencies.

    As a result, the commodities have taken a hit, with the CAD, AUD and NZD all dropping this past week.

    Reply
  17. Babysteps

    Thanks for reply.
    I’m long term trader so ,I will hold my position.
    I think we got reverse to UP.
    Well let’s see next weeks
    Wish u happy weekend
    Egkid

    Reply
  18. Babysteps

    Thanks for reply.
    I’m long term trader so ,I will hold my position.
    I think we got reverse to UP.
    Well let’s see next weeks
    Wish u happy weekend
    Egkid

    Reply

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