Cancelled Open Orders: 2012-07-20 1:35
Looks like the USD/CAD downtrend continued after all.
Yesterday the dollar bears went on a frenzy after the U.S. released weak jobless claims, existing home sales, and Philly Fed index as they believed that the data support arguments for QE3. Even commodity bulls joined the party as oil rose by at least 3% while gold also rebounded after suffering two days of losses.
Too bad I missed the Loonie party! USD/CAD only went up to 1.0107, which is a couple of pips shy of my entry order at the 38.2% Fib near the day’s open price.
On the one hand, I feel that I could’ve jumped in when I saw that price was having trouble meeting my entry level. Maybe I could’ve also set my orders a couple of pips lower and concentrated on entering at “areas” instead of hard levels.
But on the other hand, I feel like patting myself on the back for waiting for following my original trading plan. As I have mentioned in my Q2 trading reflections, one of my strengths was patience in waiting for price to hit my orders instead of jumping in.
What would you have done in my position? Should I have shorted at market, adjusted my orders, or did I actually do the right thing?
Your tips and opinions are always welcome!
Trade Idea: 2012-07-19 1:41
I may have gotten burned on my previous USD/CAD trade but I’m giving this pair another shot! This time around, I’m planning to follow the trend and short on a retracement.
This pair has been on a steady downtrend lately, thanks to the BOC‘s relatively upbeat assessment of Canada’s economic performance. They’re so optimistic about their prospects that they even thought that withdrawing some stimulus sooner or later is necessary!
As for Uncle Sam, on the other hand, things aren’t looking so rosy. As Big Ben pointed out during his speeches, the U.S. is still battling with high unemployment and weak spending. Although he stopped short of mentioning the dreaded QE3, he noted that their economy might need some form of additional stimulus down the line.
When it comes to fundamentals, I always like pairing a strong currency with a weak one, and I think USD/CAD is a match made in heaven! Not only do the fundamentals line up for a short trade, the technical elements also hint that the path of least resistance is downwards.
There’s a falling trend line connecting the pair’s highs on the 1-hour time frame, while the 38.2% Fibonacci retracement level is close to today’s open price and the 1.0100 major psychological level.
If I’m able to jump in a short trade around these levels, I’ll set my stop 40 pips away, just above the 1.0150 minor psychological resistance. I’ll be aiming for the 1.0050 mark, which is closely in line with this week’s bottom WATR.
Do you think the USD/CAD downtrend will be my friend? Don’t hesitate to warn me if you think this setup is a bad idea! And, if you’re planning to join me on this one, make sure you read our risk disclosure first.
Good luck in your trades this week, buddies!
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