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Trade Closed: 2010-02-25 21:19

PoD Chart

I got seriously burned on this one as the Loonie managed to bust out of its range late into the European trading session session. The US core durable goods orders report came in worse-than-expected, spurring further risk aversion in the markets. Needless to say, I got stopped out.

Stopped out at 1.0680
Total: -1.00% loss

Looking back, as one of my readers pointed out, I might have been reckless with my entry. Risk aversion was all time high, which is pushing the commodity-based currencies like the Loonie lower. Moreover, I ignored that bullish flag formation and focused too much on the Fibs. I would’ve been better off going long on the upside break. Then again, things are always clear in retrospect.

Trade Idea: 2010-02-24 22:13

PoD Chart

I like this setup because my desired entry point at 1.0575, yesterday’s high, nicely lines up with a previously broken support level. Remember, whenever price passes through a major support level, that price level becomes resistance. More than that, it seems that the 50% Fibonacci retracement level has been providing strong resistance for the pair. With stochastics showing that the pair is overbought could we see the pair swing lower?

Looking at BabyPips’ Economic Calender, there’s nothing coming out from Canada today. However, I’ll be on the lookout for news coming out from the US. Durable goods orders data is due at 1:30 pm GMT, and it is expected to print an uptick of 1.1% in orders. This shouldn’t cause too much of a surprise though, as it’s been rising steadily the past couple of months.

The one event that could provide some volatility in the markets is Ben Bernanke‘s speech that follows at 2:00 pm GMT. He will be talking about monetary policy before the Senate Banking, Housing and Urban Affairs Committee. He will probably talk about interest rates once again and I wouldn’t be surprised if he repeats that interest rates will remain low for an extended period.

Again, here’s my plan:

Short USDCAD at 1.0575, pt1 at 1.0410, pt2 at 1.0250, stop loss at 1.0680

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