USD/CAD: Watching My Favorite Channel – Trade Cancelled

Trade Update: 2012-08-03 1:39

I guess I can’t say thanks to Draghi for the second time in a row, huh?

Just as we had expected, the ECB’s interest rate decision caused crazy price action among our favorite currency pairs. Prices of high-yielding currencies shot up moments before the ECB head honcho took center stage, and then fell down faster than a zero gravity amusement park ride when he only hinted at more action coming up in September. Ha! And I thought “stayed tuned” lines can only be heard from TV series and reality shows!

USD/CAD Closed Open Orders

As it happened, USD/CAD only tipped an intraday high at 1.0085, which is a couple of pips away from my 1.0090 order. Boo! I decided to cancel my orders since the big NFP report is coming up in a few hours.

Besides, I’m not liking the reversal-like candlesticks on USD/CAD’s daily chart. Not only did the pair bounce from parity, but it also looks like it found support at the bottom of the descending channel!

But don’t worry, I’m still watching the important levels for the pair. I might even point them out in next week’s edition of my Comdoll Trading Kit. But for now, this Happy girl is ready for the weekend.

How about you? Did Draghi’s speech help or hinder your way to profits? Or did you stay out completely? Let me know!

Trade Idea: 2012-08-02 2:54

With my all-time favorite USD/CAD falling channel still intact, I’m looking to join the downtrend on a retracement!

As you can see from the 4-hour time frame, the 38.2% Fib level lines up with a former support level just below 1.0100 while the 50% Fib level is right in line with this week’s top WATR.

USD/CAD Channel Trade

Aside from the technical lining up neatly, I’m also digging the fundamental factors that support this potential short trade. Even though Canada isn’t set to release any economic reports over the next couple of days, I have a feeling that the higher-yielding Loonie could get a boost from risk appetite in case ECB head Mario Draghi starts giving upbeat remarks during today’s ECB policy decision.

Recall that the ECB head’s testimony had quite a huge impact on market sentiment last week when he committed to protecting the euro at all costs. He could echo the same tone during the press conference around 1:30 pm GMT today.

Of course I also noted that the U.S. NFP report is due tomorrow and that another round of weak jobs data could trigger a massive dollar selloff, which would also be good for my short USD/CAD trade. After all, the Fed is showing a bit more inclination towards further easing and five consecutive months of poor employment data might push them over the edge.

Here’s my trade plan:

Short USD/CAD at 1.0090 and 1.0120, stop loss at 1.0170, profit targets at 1.0000 and .9970.

I’ll be risking 0.5% of my account on each position and if you plan to join me, you should take a look at our risk disclosure first.

I’m crossing my fingers that I could have another winning trade to follow my previous AUD/USD win. Do you think I can make it? You know where to reach me!

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Have fun and good luck trading this week, friends!

Happy time

Other Popular Articles:

AUD/USD trade What is the STA strategy? Q2 2012 in Review Comdoll Trading Kit (July 30-August 3, 2012)

  • Albert Nel

    I just had to write and congratulate you on the most entertaining use of images to spice up your screenshots – and this one wins a gold medal 😉 Heh, Olympics jokes.

    • happypip

      Aww, thanks! I really appreciate that 🙂

  • sepramfx

    Hello Happy pip how can I reach you on tweeter?

  • sepramfx

    Are you Raghee hooner on tweeter? with a power bike profile picture?

    • happypip

      Nope, not Raghee Horner, just Happy Pip! 🙂

  • Autoxn

    I am curious why you would add to a potential losing trade if you got in at 1.0090 then add another position at 1.0120.

    • happypip

      I’m trying this technique called scaling in:

      Basically, I’m seeing a couple of potential inflection points on the chart but I’m worried that price wouldn’t reach the farther one. That’s why I set one short order on the closer inflection point (1.0090) and another one at 1.0120 in case it reaches and lets me get in the trade at a better price.

      • Autoxn

        Ahh.   I will have a look at that.  Thanks for the info.

  • Kasqade

    I see what you are seeing here. I also like how indicators are showing some exhaustion in their tops (RSI and SSD) coupled with a weak move in price action upwards. If you are still in this trade (from my understanding this was a trade for the week). Are you expecting to stay in this trade for more than a week? Given the likelihood of USD strength tomorrow against the backdrop of a positive number in unemployment claims today and a bounce on a technical level?

    • Kasqade

      As soon as I wrote this. It quickly slipped my mind how the probabilities of a worst-than-expected outcome are much higher than better than expected result and thus a dollar boost forward. Given that employment not only needs to keep pace with absorption of new entrants but also should pace high enough to even put a dent in the unemployment figure to really give us a game changing move of the USD upward.

      • happypip

        Good point! If that’s the case, I should probably cancel my open orders during the NFP release. What do you think?

    • happypip

      Well, I was hoping it would get triggered during the ECB statement and press conference but apparently Draghi’s speech turned out to be a disappointment. I’ll have to reassess the fundamental situation in a bit so I can decide whether to keep my trade open during the NFP or not.

      Wouldn’t better than expected US jobs data be positive for risk (and the Loonie) though? I’d love to hear what you think!

  • Kasqade

    I am actually still short in this pair. 

  • Shawn

    A low reading on NFP will mean risk on because it will increase the likelihood of QE3, so bad news will mean USDCAD drops/EurUsd rises, Aud/Usd rises etc. A better than expected NFP will mean USD strengthens meaning a slower long-term recovery of our economy because less likelihood of Fed Stimulus and  just a slow grind, so risk off.