Trade Closed: 2010-05-20 22:52

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

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

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!