Trade Update: 2011-05-17 6:14
Yipee! Make that a hundred pips for me! Breakout trades aren’t that scary after all, huh? At first I wasn’t so sure about trading that bullish pennant on USD/CAD’s 1-hour trade but, after an hour of yoga and a shot of espresso, I eventually convinced myself to do it. And I’m so glad I did!
Riskier assets took a hit last week when risk aversion trolled the markets. On top of that, traders realized that commodities were already overvalued and it’s time to flock back to the safe-havens. Heck, they probably got the heebeejeebies after reading Forex Gump’s “3 Reasons Why You Should Short the Aussie” and Jack the Pipper’s reasons for a deeper commodities correction!
USD/CAD broke to the upside but fell short of the .9700 handle when the U.S. released its PPI and retail sales figures. Good thing my stop was located below the .9600 major psychological level, which held as support. From there, USD/CAD rebounded all the way up to the .9750 area when the U.S. CPI figures were reported. Unfortunately, my profit target didn’t get hit then… Boo!
As I mentioned in my latest Comdoll Weekly Replay entry, there were better setups that took place last week and I could’ve made bigger wins. Still I’m pretty happy with this one and I’m crossing my fingers that I can go for more. I’m eyeing that winning Trade of the Week entry that suggested a longer-term USD/CAD trade.
Do you think I should take it? Quick, tell me more on my @Happy_pip Twitter account and Playing with Comdolls Facebook page! I can’t wait to talk to you guys. I feel like I’ve been too quiet for the past couple of days!
I don’t know about you, but I’m seeing a bullish pennant on USD/CAD’s 1-hour chart! From what I learned in the School of Pipsology, chart patterns like these often lead to upside breakouts. If that happens, I’ll be waiting with a long order above .9640, which was yesterday’s high. Once that level breaks, USD/CAD could zoom all the way up to the .9700 resistance level.
Now I know that major psychological handle is tough to break. I mean, we saw USD/CAD test that level four times these past few days and failed to make any headway. Maybe all it needs is a good strong catalyst for today…
And what better catalyst than the U.S. retail sales report!
As I’ve been discussing with my awesome friends on Twitter and Facebook, we saw a midweek reversal on comdoll price action yesterday when commodity prices weakened on a bit of risk aversion. I’m still bullish for commodities in the long run, of course, but this week I’m hoping that the U.S. retail sales report will push USD/CAD to my profit targets.
As my buddy pointed out in his U.S. retail sales article, EUR/USD dropped at the release of mixed numbers way back when the euro debt crisis was in vogue. Now that Greece restructuring efforts are making headlines, I’m thinking we’re about to see a déjà vu for risk sentiment!
For now though, I’ll set my stop below the bottom of the bullish pennant, which would be a few pips below the .9600 handle. In case it goes my way, I’ll be moving my stop to breakeven once the price hits the .9700 mark. Ultimately, I’m aiming for the .9750 level, which coincides with the top of the falling channel on the daily chart. That’d be a potential 1.67:1 reward to risk ratio on my trade. Not bad, huh?
Here’s my plan:
Will this trade finally give me the pips that I’ve been craving for? Don’t hesitate to share with me your thoughts! Who knows, you might save me from another heartbreak!