Close Trade: 2008-04-21 13:49
It seems the market has reached a bit of indecision, to no surprise as we approach the Bank of Canada’s interest rate decision tomorrow. Expectations are for a 50 basis point cut, and as the US Dollar decline appears to be slowing down, I’m going to get out of our remaining short position at market.
Close remaining position at market – 1.0079
1st Half: +200 pips
2nd Half: +121 pips
Total: +0.8025% gain
Stay tuned as we have a nice channel forming on the AUD/USD that may make a good trade idea!
Trade Update: 2008-04-18 10:09
The US Dollar rallied this morning on against many of the majors, but the Loonie managed to hold its ground against the broad based rally.
It appears that oil and a boost in corporate profits in Canada continues to support the Loonie against the Greenback today and traders have ignored the weaker Wholesales number out of Canada.
We have to be cautious though, as the US Dollar rallies, this puts pressure on oil prices and commodity demand. So, we will continue to hold for now, but I may close the trade early depending on price action today. Good luck!
Trade Update: 2008-04-17 09:27
Parity was reached between the Greenback and the Loonie for a moment and we closed a portion of our position down to lock in some profits.
I have already adjusted my stop to breakeven in my last update, so no need to move it for the time being. If we do see the pair move lower to .9900 then I will trail the stop down to 1.0100 to lock in further profits.
Stay tuned for further updates and good luck!
Trade Update: 2008-04-16 10:34
After waiting for a while, our views on USD/CAD have finally played out as the pair dropped lower today on a broad USD selling. We are approaching our first profit target as we are about 30 pips away from 1.0000. I would like to adjust our stop as we end the European/US session overlap to reduce our risk at this point.
Adjust stop from 1.0400 to 1.0200 to create a risk free trade.
We will still close a portion of our position at 1.0000 and with oil inventories falling today and oil prices going above 114.00, we may hit that point as the Loonie continues to look more attractive.
Stay tuned and good luck my friends!
Trade Update: 2008-04-14 10:19
Hello! The G-7′s concerns on recent sharp currency fluctuations was a surprise this weekend, and as soon as the markets opened up on Sunday we saw a pop in the US Dollar. Fortunately for our position, this didn’t hold up too long as USD/CAD is now back to our entry point at 1.0200.
I am still short bias on the pair for the fundamental reasons explained earlier, so I will continue to hold until data changes for a stronger US Dollar.
We have a lot of economic events to go through this week, most notably inflation data from the US, so high volatility should be in full effect. Stay tuned for updates and possibly quick trade adjustments. Good luck!
Trade Update: 2008-04-11 14:25
Our position was opened shortly after the US session ended yesterday, and it has been a roller coaster ride since then.
The pair trended lower throughout the Asian session and hit a low of 1.0140 before rallying during the morning European trading session. The pair is now back above our entry point moving sideways around 1.0220 – 1.0240.
We do have event risk this weekend with the G7 meeting. Will the US Dollar decline be addressed? Will the G7 step in to save the Greenback? Probably not as the credit crisis is the immediate concern, and unless there is an intervention, we may see more US Dollar losses after the weekend. Of course, if we do see surprise action to boost the US Dollar, my short term outlook will have to change.
So, stayed tuned for updates and have a great weekend!
Trade Idea: 2008-04-10 14:23
Has anyone ever seen that move “Galaxy Quest” where the line, “Never give up! Never surrender!” in a strange alien voice was made famous??? That’s one of my favorite movies (I like silly, corny movies) and that line is how I totally feel about USD/CAD.
I am still short bias in the medium term. Oil is just hanging out above $100, US economy appears to be much weaker than Canada’s (today’s trade balance data from both is another example), and the interest rate differential is still going the Loonie’s way. Also, I think there is plenty of US weakness that needs to be priced in for the time being.
On the chart, we have some signs of a reversal back to the downside starting with long upper wicks at the 61% Fibonacci retracement level. It appears sellers are still in control of 1.0200. We also see bearish divergence as the price makes higher highs, while the stochastics make lower highs – a nice early sign of a medium term trend change. So, I will “never give up, and never surrender” on my short beliefs on USD/CAD by building a new short position around 1.0200. I will have a larger stop this time of 200 pips (reduce position size to your risk comfort), but I am going for parity at 1.0000 and .9800 as my initial profit targets. Maybe more if the trade goes our way.
Short USD/CAD at 1.0200, stop at 1.0400, pt1 at 1.0000, pt2 at .9800.
Remember to never risk more than 1% of your account on any single trade. Adjust position sizes accordingly.
We have large exit points on our trade, so look to hold this one for a bit if we get triggered. While you wait you can watch “Galaxy Quest” and see how cool a movie it is! Haha…jk. Stay tuned for updates and good luck my friends!