Thank goodness I stuck to my trade plan and avoided getting chopped up by USD/CAD‘s price action last Friday. As I mentioned, since this was supposed to be a day trade, I’d cancel my open orders if my sell stop order doesn’t get triggered on the same day.
Good thing my fingers were fast enough because USD/CAD actually dipped to my entry area later on before bouncing back up and hitting my stop. I think that was around the time the U.S. printed a weaker than expected initial jobless claims report, which triggered some safe-haven buying.
For now, it looks like the range on USD/CAD is still holding but I might have to look for other setups to play instead. Got any ideas you’d like to share?
Trade Idea: 2012-03-27 07:24
In an effort to clock in one last winning trade for the month, I’m taking a day trade on USD/CAD!
If we take a look at the pair’s 4-hour chart we can see that the pair is sporting reversal signals near the week open (WO) area. Not only am I seeing dojis on the chart, but Stochastic is also in the overbought region at the moment!
Meanwhile, zooming in on the 1-hour chart will also reveal a consolidation at the WO and the day open (DO) area. With a bearish divergence also popping up on the chart, I’m counting on the consolidation to break to the downside.
Here’s my day trade plan:
Short USD/CAD at .9970 (break in consolidation on the 1-hour chart), tight stop at 1.0020, PT at .9920.
If my trade gets triggered and it hasn’t reached the levels I’m aiming for by the end of the day, I’m planning on closing all positions. If you’re thinking of taking this trade with me, make sure you practice proper risk management and check out our risk disclosure.
I’m going to watch my day trade closely though. Not only are investors worried about the economic growth of China, eurozone, and the U.S., but word from my forex friends is that the BRIC are refusing to follow the sanctions against Iran. If this is the case, then oil prices could go down and weigh on the Loonie.
On the other hand, some are also saying that the selloff might be overdone for the week and that we might see the high-yielding currencies rally against the dollar.
What do you think of my trade idea? Will USD/CAD drop today, or will we see a continuation of yesterday’s price action? Don’t hesitate to put in your two cents!
Good luck in your trades this week, buddies!
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