Close Open Orders: 2010-02-22 22:50
Don’t you just hate it when your trade idea was right but you just couldn’t get triggered? Price action on the USDCAD pair found resistance at the 1.0510-1.0530 area, that week’s open price before heading downwards. I was already pretty aggressive with my trade idea, putting an order very early at the 38.2% Fibonacci retracement level yet market volatility wasn’t able to take price there. With a new low established, my trade idea idea has been invalidated so I’m closing my open orders.
It makes no sense to hold on too an invalidated trade right? Besides, there’s always tomorrow! Just need to dig deeper and find another setup!
Trade Idea: 2010-02-17 21:50
Looking at the 4-hour chart, we can see that the USDCAD has been on a major fall. In fact, the pair has fallen the past 6 days! It may be time for a short retracement, which could give the loonie bulls a chance to jump back in. I’m looking to enter at 1.0550, which was a previous support level that could now act as resistance. Furthermore, it lines up with the 38.2% Fibonacci retracement level. With stochastics showing upward momentum, I may just get triggered today if we see a correction.
I’m setting my stop loss at 1.0690, which is way past the 61.8% Fibonacci level. My first take profit point will be at 1.0415, where there appears to be strong support. My ultimate target will be just above the yearly low at 1.0250.
On the fundamental side, risk aversion, spurred by more debt problems from the euro zone, has been on a roll yesterday, forcing the loonie to take a break from its recent rallies. This market sentiment could continue to boost the safe-haven US dollar higher against most majors, pushing the USDCAD closer to my entry order. Meanwhile, economic reports from Canada could allow the loonie to bounce back later on. Canada’s inflation report is expected to print a 0.3% rebound from the 0.3% decline in price levels last December. Strong US economic figures, such as the PPI and Philly Fed manufacturing index which are due during today’s US session, could revive investors’ confidence and encourage them to pursue higher-yielding assets.
As usual, I’m risking 1% of my account on this trade. Again, my plan is to –
Short USDCAD at 1.0550, stop loss at 1.0690, tp1 at 1.0415, tp2 at 1.0250