Shorting USD/CAD at the Top of the Channel – Avoided a heartbreak!

Trade Update 2011-11-22 01:54
So much for wishing and waiting! After finding support at the 1.0200 area, USD/CAD bounced right back to my entry point and rallied even higher. Thank goodness I moved my stop to breakeven!

USD/CAD Rising Channel Update

In retrospect, I probably should’ve just locked in whatever profits I had instead of crossing my fingers and holding on. Risk aversion was pretty strong during the last few days of the week as downbeat reports from the euro zone just kept coming in. As I pointed out in my latest Comdoll Weekly Replay, traders were focused on the bond auctions that were taking place in Italy and Spain, which highlighted the looming possibility of a debt contagion.

Oh well, you can’t blame a girl for trying, can you? I guess I was just really determined to erase my losses from my previous trade that I held on to my USD/CAD short even though there were some technical and fundamental signs telling me to jump out of the trade. Remind me next time not to be so greedy again, okay?

You know where to catch me!

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On to the next comdoll setup!

Happy time

Trade Idea: 2011-11-16 06:17
After AUD/USD showed me who’s boss in my last trade, I’m now focusing my happy vibes on USD/CAD.

If you squeeze your 1-hour chart just a bit, you’ll see that USD/CAD has been trading inside a shallow rising channel between the 1.0200 and 1.0080 handles since the start of the month. However, if you zoom in on the past couple of days, you’ll also see that the 1.0270 area has served as the new resistance area for the pair.

USD/CAD Rising Channel

And that’s where I was able to enter! A couple of hours ago I noticed a potential evening star pattern while the pair was hanging around the area, with a bearish divergence and overbought stochastic signal also supporting a bearish trade. I was able to get in at 1.0270 with a tight stop at 1.0325. I placed my first profit target at the potential mid-range support at 1.0150.

I have to watch my trade closely though. Risk aversion is still in vogue in the markets, and with France and Spain holding their bond auctions and Greece’s Papademos up for a confidence vote, there are plenty of chances that the comdoll bears would attack for another day. Of course, I will also keep tabs on the U.S. CPI and crude oil inventories reports in the U.S. session in case they turn out positive for the Greenback.

Here are the details of my trade:

Short USD/CAD at 1.0270, stop loss at 1.0325, first profit target at 1.0150. I will be risking 0.75% of my account.

What do you think of my trade idea? Is my technical setup enough to withstand the potential volatility, or should I make a few tweaks in my trade? Should I trail my stop this time?

Any advice on one of the pages below will be much appreciated!

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Chips, dips, and pretty please give me some tips!

Happy time

  • Damob

    I’m in the game baby! shorts to 1.20

    • danbld

      please look at the sp500 and dow charts. there is the key

      • Damob

        Goal achieved! We are waiting for the rollback and again in the game!

      • happypip

        Yeah I was looking at those charts earlier too. Good thing oil prices is keeping my trade afloat. Now waiting to see if the pair will break any major support lines :)

  • danbld

    if u want to go against usd (which is strong now) go ahead, good luck, maybe a good ideea is to buy usd/cad after a pullback if appear. good luck again

    • forexnoob

      well, kinda agree with you here man..the rising channel looks solid at the moment..but we’ll see how it goes..but again, happypip might be right on this one..:)

      • danbld

        my strategy in this market (with a lot lot problems from EU) is to sell any kind of rally. look at the eur/usd rally from octomber….to buy euro???? crazy!!!!!

      • danbld

        i am agree with her, a corection is possible, but who knows…..maybe with a “relax” sl….good luck 

        • Mario

          I’m looking for a breakout on the 4hr chart. Seems like 1.02800 has been holding as a resistance for a very long time (since october). If a breakout occurs, I’m sure there will be a huge rally for the bulls.

          • happypip

            Hey danbld, forexnoob, and Mario!

            Thanks for your countertrade ideas! If the 1.0220 area holds for the next couple of hours, I’ll also consider going long either at the 1.0220 support or at the breakout of the rising channel. Right now I’m having mixed feelings with the oil prices and bearish news that I’m seeing.

            What do you guys think? Have you entered your long trades on this pair? :)

          • danbld

            Happy, if u are looking at the 4H chart, its a inverted h&s pattern, that why is hard for me to enter short, but again, i agree with u, a pullback will come ;) 

          • happypip

            Oh yeah, I see that inverted head and shoulders formation on the 4-hour time frame. I’m seeing a regular head and shoulders though on the 1-hour. Then again, I can’t really tell if the pair is just simply ranging. Do you think I should just lock in my profits now?

          • danbld

            wait 1 hour after eu market open and take a decision.

          • happypip

            Good call. I’ll keep you posted!

          • danbld

            Morning, Happy. offf, your question is hard. eu future are down now, us future are up after last night. Also, look at the sp500 chart, downside more likely. Your call.

          • danbld

            Hello again, Happy! I m not long on usd cad, but I agree with u about a pullback. In this times, my strategy is to sell rally. For u oil is your friend, for me usd is the best friend. I wait for a pullback on gbpusd, around 1.59 to enter short. Good luck

          • happypip

            Cool beans! I’ll let my friend Hucklekiwi Pip in on that short GBP/USD idea of yours. Hope you don’t mind :)

  • Foricks

    I like it…I was already in the trade and have the same TP!  Just have to muscle through the 1.0220 line.  That number seems to have been resistance all year.

    • happypip

      Looks like we’re getting a bit of movement after the last 4-hr candle closed. Let’s see if it will close below the 1.0220 area :)

  • Cillian Murphy

    Don’t forget the 50% Fib from the 4th Oct highs to the 27th Oct lows! It’s a bit choppy at the moment but the ranges have held well

    • happypip

      Oh is that where the 50% Fib lines up near 1.0300? Yeah I think I’m seeing it too. Fortunately, a bearish divergence is now shaping up on the 4-hour chart right after the most recent bearish candle closed. Keeping my fingers crossed on this one! :)

      • Cillian Murphy

        You know what they say: I’d rather be lucky than good!!

  • Diptheria

    Great setup Happy Pip!

    • Diptheria

      Crude just hit 100.30, that’s going to help.

      • Diptheria

        … and just keeps going

        • happypip

          Thanks for the support, Diptheria!

          As I told one of my friends on Twitter, I don’t know about the other girls, but oil is my best friend right now ;)

  • the seeker

    Hi are you still trading this pair ?

    • happypip

      I’m out of this particular trade already, but yeah, I still trade USD/CAD along with other major comdoll pairs. Do you have any setups in mind? :)

  • jpbed

    should wait for strong trendline break, don’t go against momentum

    picture: 2 std dev. channel + trendline

    • happypip

      Cool chart! Do you have orders at specific levels? :)

      • jpbed

        didn’t trade this setup ^^