As I talked with my friends in my @Happy_pip Twitter account yesterday, I kept close tabs on Canada’s GDP to look for a trade. You see, I thought that there was a chance that the report would print worse-than-expected, which would’ve sent USD/CAD flying above the strong support area in the 4-hour chart.
Okay, the report DID print a bit lower in April from its 0.3% growth in March, but apparently, the Loonie traders were willing to shrug off the weak data in favor of risk appetite. Heck, it didn’t even matter that oil prices also halted its sharp rally that started early this week!
As a result of the risk-friendly market environment yesterday, the pair wasn’t able to meet my requirements for a long trade. It didn’t present a good short entry either, as the pair just kept on going down after the report. Boo!
As eager as I am to find a trade though, I’m still happy that I didn’t lose pips this week. I’ll just make up for it by having a super sure-win-no-lose-trade next week! Or maybe just a trade with a good setup will do.
In any case, I’ll try to make more sense of just what moved the comdolls this week on my Comdoll Weekly Replay this Sunday. In the meantime, why not join our budding little comdoll community in one of my new Comdoll Corners? You’ll have a blast sharing your opinions, I’m sure.
Till this Sunday!
Trade Idea: 06-30-2011 6:36:30
If there’s one thing I don’t like, it’s getting mixed signals. And I’m not just talking about dating! USD/CAD has got me confused with the conflicting technical and fundamental signals!
For the fundamentals, Canadian GDP for April is expected to print a 0.1% decline. Heck, we might even see worse than expected results because most of Canada’s economic reports for April fell short of expectations.
For instance, headline retail sales chalked up a mere 0.3% increase, less than the predicted 0.6% rise, while core retail sales stayed flat. Building permits also slumped by 21.1%, which was almost 10 times as much as the predicted 2.3% drop. In addition, the trade deficit widened from 0.4 billion CAD to 0.9 billion CAD instead of reaching a 0.4 billion CAD surplus. Even new motor vehicle sales slid by 1.1% instead of rising by 1.8%.
USD/CAD has also dropped by way more than its average weekly range (160 pips) and might be due for a reversal. What’s more, it’s almost the end of the month and traders might want to cash in on their long Loonie positions. Stochastic is heavily oversold on the 1-hour and 4-hour charts.
All right, here come the arguments from the other side! Risk appetite is still on a high as traders rejoiced over the Greek austerity program’s approval. I’m thinking this could support the high-yielding Loonie for a while.
Crude oil prices saw a strong rebound yesterday as risk-taking surged. Also, stronger than expected Canadian inflation reports fueled speculations of an upcoming BOC rate hike, which is very bullish for the Loonie. Of course there’s always the chance that Canadian GDP could beat expectations and print a positive reading.
As for the technicals, the pair just broke below the rising channel we all had our eyes on last week. Remember our Happy Comdoll Corners? Right now it’s forming a bearish flag, which means that it could be aiming for more gains.
Whew! That’s a long dilemma!
Even though I recently caught a win with my long USD/CAD trade, I’m still hurting over the loss that I got from shorting this pair before. I remember using multiple time frame analysis on my short USD/CAD trade idea back then, yet it still failed me because I was able to enter too late. At that time, USD/CAD already broke below several significant support levels before I was convinced to jump in. And it looks like I’m seeing the same scenario right before my eyes!
Right now I’m waiting for Canada’s GDP before I commit to any side. I’m thinking that I could go long just above .9700, place my stop at .9640 my put profit targets at .9800 and .9890. Of course, Canada’s GDP could also print to the upside, and then I’d be even more confused!
So what do you think? Is USD/CAD really presenting mixed signals, or am I just too set on my long USD/CAD idea that I’m making it sound like it’s valid? If you want, you can give your two cents on the box below, or give me a shoutout or even a “Hey Happy, it’s time to short!” on my @Happy_pip Twitter account, or my Playing with Comdolls Facebook page.
I really appreciate your help guys!