Trade Update: 2011-01-25 1:48
The CPI report was a huge disappointment as it printed a 0.3% drop in price levels, worse than the 0.2% decline initially expected. This confirms that Canadian inflation is still weak, which most probably means that the BOC won’t be in a rush to hike rates any time soon. Nooooo…
Traders already started pricing in their expectations for this report as soon as the London session kicked off. Because of that, I had to let go of my recent profits as I awaited the CPI results. Even though I was up by more than a hundred pips lately, I was only able to lock in 25 pips since I closed manually at 1.0000. *sniff*
I probably should’ve waited until the initial reaction to the report died down before closing my trade. That way, I probably would’ve made 25 more pips if I closed a couple of hours later.
It looks like resistance at 1.0000 still held, but that was a tough call and I didn’t want to risk erasing all my profits completely. Besides, I stated clearly in my plan that I would close my trade if the actual CPI came in worse than expected.
Oh well, here’s how it turned out:
Profit/Loss: +25 pips / +0.25%
Again, not bad, but definitely could’ve gone better. I hope I lock in more pips with my next trades!
Trade Update: 2011-01-25 1:48
A bit of risk appetite and anti-dollar sentiment in markets have been dragging the pair lower for the past few candles on the daily chart. I decided to tweak my plan a bit and put a 100-pip trailing stop on the trade as soon as the pair hit .9925, moving my stop to breakeven in effect.
Ack, I hope it’s the right thing to do! I’ve been struggling not to lock in at least a few pips on this trade, especially since Canada will be releasing its CPI numbers a few hours from now. My forex friends told me that the core inflation rate is expected to decline by 0.1% in December, but I’ll trade my freshly-baked croissants for a positive figure!
Aside from Canada’s CPI report, the big FOMC statement is also making me jumpy. They say that no big change is expected from the FOMC members, but surprises might be lurking around the corner.
Hmm, I think I’ll just watch these reports closely, and see if manually closing the trade becomes necessary. If the actual inflation figure comes in worse than expected, I plan to just lock in whatever profits I have and move on to a new trade idea for the week. Still, I hope that Canadian inflation beats expectations so that I could lock in half my winnings at .9850. Fingers crossed!
Trade Idea: 2011-01-20 23:01
Down, dollar, down! Yesterday the currency bulls munched on the Greenback like it was buffalo chicken wings when the U.S. posted really good economic reports. Heck, it gained dramatically against almost all of its major counterparts!
But the Loonie isn’t without its redeeming factors! Like a triple chocolate pecan cookie that’s a bit burnt on the outside but is really soft and chewy on the inside, many traders passed up on Canada‘s better-than-expected economic reports.
Canada’s wholesale sales advanced by 1.2% in November, which is a much faster improvement from October’s 0.3% growth. Well, that sends happy thoughts for the upcoming retail sales release at 1:30 pm GMT today. I sure hope the actual report doesn’t disappoint.
Its leading index also flew by 0.5% in December, a bit higher than the expected 0.4% increase. Of course, we must not forget that the Bank of Canada recently raised its economic forecasts on the Canadian economy!
And don’t get me started on China’s economic growth! While markets were spooked by the possibility of the PBoC implementing more tightening policies in the near future, I still think that growth in China is good for the commodity-related Loonie.
From a technical standpoint, all the indicators seem to be lining up for another USD/CAD drop. As Big Pippin pointed out, the pair’s downtrend is still intact because the descending trend line on the daily chart is still holding. Can you imagine how giddy I got when I saw that shooting star form right on the 50% Fibonacci retracement level? That’s where I placed my short entry, whee!
Plus, it looks like the former support level at the 1.0000 handle would act as resistance now. But since this is a longer-term trade, I set a wider stop of 100 pips, which would be located just above the 61.8% Fib and the next major psychological level of 1.0100. I figured that the pair could go as low as the .9850 area so I’ll lock in half my profits there.
Oh, before I forget, I wanna give a quick shout-out to all those who gave their two cents and voted in my last entry‘s poll. You see, I was trying to figure out how I could best hold on to my profits and it seems like using a trailing stop was the popular bet. I’ll be trying that strategy out on this Loonie trade.
Here’s my recipe for success:
Shorted USD/CAD at 1.0025, stop loss at 1.0125, pt1 at .9850. I’ll close half my position at my first profit target and use a 100-pip trailing stop from there. As always, I’ll risk 1% of my account on this trade.
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