After a strong run higher since entry, the story for oil, world trade & economic data has shifted enough to give bears control in USD/CAD, eventually taking me out of my long position. Here’s a quick review.
Trade Review: Uptrend Momentum In USD/CAD
Got into this long position back in June based on the price action trend higher, which was likely fueled by weak economic reads from Canada back in May/June, trade war fears and bearish oil price action sparked by the expectation of OPEC raising production.
And everything looked hunky-dory for a minute there as the pair was quickly approaching the previous swing highs with strong momentum, but things turned for the worse for USD/CAD bulls like myself as driving themes began to change in the latter half of July.
It was likely a combination of reduced trade-related jitters, Saudi Arabia’s decision to temporarily halt crude transport through the Red Sea shipping lane, and positive NAFTA-related developments that brought on the reversal lower from the 1.3300 handle, so much so that the uptrend pattern broke near the end of July as the rising ‘lows’ cracked on the four hour chart above. Momentum continued lower this week, likely on Canadian GDP coming in better-than-expected this Tuesday, and possibly on some positioning ahead of the FOMC meeting on Wednesday to hit my adjusted stop at 1.2980 and close my long position out for a small scratch.
Total: -120 pips / -0.15% loss on 0.50% risk
After a little bit of thought, I think this pair is still in an uptrend and the latest geopolitical and economic developments aren’t enough to throw me off of my bias favoring the Greenback over the Loonie.
So, I probably got shook out a little too early, and if the 1.3000 area continues to hold as support and we see signs of bullish life in the price action, I could hop back in this pair long. Plus the back and forth between China and the U.S. on tariffs puts the odds of global risk-off sentiment hanging around for a while longer, likely benefiting the Greenback as a safe-haven play for traders.
So, this pair is going back into the watchlist for a long play for now, which leaves my AUD/NZD short as my only open position at the moment, and my AUD/CAD short setup idea as my next potential swing play as it continues to go my way. Stay tuned for updates on those plays, as well as new ideas in the works–and as always, thanks for checking out my blog, good luck and good trading!
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