Close Trade: 2009-02-12 13:17
It looks like risk sentiment is over powering technical analysis as concerns of the revised stimulus plan will fail is being priced into the markets. Traders are moving money back into safe haven plays and out of “riskier” assets like high-yielding assets, commodities, and equities. So, I’m gonna get out, take a small hit, and look for opportunities else where.
Close short position at market (1.2510).
Total: -110pips/ -0.62% loss
Trade Idea: 2009-02-11 17:50
I have the 4 hour chart up, the pair has been rangebound, and we can see a little “triple top” action at 1.2500. Sellers seem to have that area locked down, and we may possibly see a move back down to the rising trendline drawn. Stochastics are also in overbought territory and turning lower, indicating exhaustion and possible reversal back to the downside.
A quick look at risk events today, and we saw Canadian and US Trade Balance both worse than expected. Oil prices fell again as inventories continue to rise on slowing global demand. My question now is, “how much longer will rising inventories and weaking demand continue to be priced into oil and the Loonie?” Well, according to price action at 1.2500, the sentiment maybe shifting, at least in the short term. Also, the Loonie still has the interest rate advantage over the Greenback.
So, I am short biased for now for mostly technical reasons. My stop will be above the highs of the triple top, and I will target the rising trendline and the previous lows just above 1.2000. Here’s what I’m going to do:
The big news for the rest of the week is US Retail Sales data and weak numbers could temporarily weaken the Greenback. Stay tuned!