USD/CAD: Trading a Bullish Pennant – 100-pip WIN!

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 100-pip win

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!

But when this week started with another round of risk aversion, USD/CAD jumped above the .9750 mark on Monday and I was finally able to lock in a decent 100-pip win. Yay for me!

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!

Happy time

Trade Idea: 2011-05-12 6:14
After my consecutive heartbreaks with AUD/USD, I’m heading over to USD/CAD! Will the bullish pennant that I spotted finally get me back in the green?

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.

USD/CAD Bullish Pennant

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:

Long USD/CAD at .9650, stop loss at .9590, pt at .9750. I’ll move my stop to .9650 once USD/CAD hits .9700 and I’ll risk only 0.5% of my account on this day trade.

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!

Happy time

  • HA

    Hi Comdolls,

    I am no expert in this field or even near close to comment on any trade but I Just noticed something on the daily chart for USD/CAD thats its on downtrend and if you draw trend line, the trend line suggest a difficult break of .9750. Stoch was about to cross 80 going towards the over bought area but falling now.

    On the other hand as USD/CAD co-relates with Oil. As oil is falling and it might impact USD too.

    I am not sure if i am right but thats what I have read and noticed on the charts. Let me know what do you think ?


    • happypip

      Hey @2be2dcc279ae74b031f479c85b6ccbd1:disqus , thanks for checking out my blog! I did notice that falling trend line on the daily chart and it looks like .9750 could act as resistance, which is why I set my ultimate profit target there.

      And you’re right, the Canadian dollar is positively correlated to oil prices, and a drop in crude oil could lead to a rise in USD/CAD. Right now, it seems that crude oil is having a tough time landing back above the $100/barrel mark, which suggests that the uptrend could reverse. Plus, that news of CME increasing margin requirements for crude oil could also impact the price negatively.

      Check out the correlation between CAD and oil right here:

      Hope that helps! See ya around!