Shorting the USDCAD at the Fib – Trade closed

Trade Closed: 2010-02-25 21:19

PoD Chart

I got seriously burned on this one as the Loonie managed to bust out of its range late into the European trading session session. The US core durable goods orders report came in worse-than-expected, spurring further risk aversion in the markets. Needless to say, I got stopped out.

Stopped out at 1.0680
Total: -1.00% loss

Looking back, as one of my readers pointed out, I might have been reckless with my entry. Risk aversion was all time high, which is pushing the commodity-based currencies like the Loonie lower. Moreover, I ignored that bullish flag formation and focused too much on the Fibs. I would’ve been better off going long on the upside break. Then again, things are always clear in retrospect.

Trade Idea: 2010-02-24 22:13

PoD Chart

I like this setup because my desired entry point at 1.0575, yesterday’s high, nicely lines up with a previously broken support level. Remember, whenever price passes through a major support level, that price level becomes resistance. More than that, it seems that the 50% Fibonacci retracement level has been providing strong resistance for the pair. With stochastics showing that the pair is overbought could we see the pair swing lower?

Looking at BabyPips’ Economic Calender, there’s nothing coming out from Canada today. However, I’ll be on the lookout for news coming out from the US. Durable goods orders data is due at 1:30 pm GMT, and it is expected to print an uptick of 1.1% in orders. This shouldn’t cause too much of a surprise though, as it’s been rising steadily the past couple of months.

The one event that could provide some volatility in the markets is Ben Bernanke‘s speech that follows at 2:00 pm GMT. He will be talking about monetary policy before the Senate Banking, Housing and Urban Affairs Committee. He will probably talk about interest rates once again and I wouldn’t be surprised if he repeats that interest rates will remain low for an extended period.

Again, here’s my plan:

Short USDCAD at 1.0575, pt1 at 1.0410, pt2 at 1.0250, stop loss at 1.0680

8 comments

  1. pipsprof.

    Be cautious this time around happypip! there is a trap around that zone,1.oil crude futures has formed a tentative bearish rising wedge on the H4,and its on its way to testing the lower border again,2.Stock indexes are not doing great the world over,and 3.the Dollar index is up, The USDCAD is going to receive the bashing of its life if not this week,next week,and it is heading for 1.09000 and beyond.I am long this pair presently and any retracement will be a great buying opportunity my lady.Be prepared!!!!!!!!!!!

    Reply
  2. pipsprof.

    Furthermore,this pair is consolidating and has formed a BULLISH flag,if you must short,I think it would be better to short from below the flag at 1.05000 region or 1.04700 zone to give enough cushion of pips.As soon as the stochastics is able to manouver its way out of its present overbought region,it will resume its midterm upward move again,Watch it!!!!!!!

    Reply
  3. pipsprof.

    Be cautious this time around happypip! there is a trap around that zone,1.oil crude futures has formed a tentative bearish rising wedge on the H4,and its on its way to testing the lower border again,2.Stock indexes are not doing great the world over,and 3.the Dollar index is up, The USDCAD is going to receive the bashing of its life if not this week,next week,and it is heading for 1.09000 and beyond.I am long this pair presently and any retracement will be a great buying opportunity my lady.Be prepared!!!!!!!!!!!

    Reply
  4. pipsprof.

    Furthermore,this pair is consolidating and has formed a BULLISH flag,if you must short,I think it would be better to short from below the flag at 1.05000 region or 1.04700 zone to give enough cushion of pips.As soon as the stochastics is able to manouver its way out of its present overbought region,it will resume its midterm upward move again,Watch it!!!!!!!

    Reply
  5. ashag28

    i dont get why if you shorted your stop wasn’t above the hourly wick? specially if you were already 30- 40 pips in profit, your stop is not at break even? the short was good. sorry i am mostly scalp into a spot trader may be thats why.

    Reply
  6. ashag28

    i dont get why if you shorted your stop wasn’t above the hourly wick? specially if you were already 30- 40 pips in profit, your stop is not at break even? the short was good. sorry i am mostly scalp into a spot trader may be thats why.

    Reply

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