No thanks to the European leaders’ announcement last week, USD/CAD broke the technical levels that I was watching and hit my stop loss before I can say “Kim Kardashian’s marriage!”
Almost after I entered my trade, USD/CAD began its collapse below the major 1.0000 level. It hung around above my stop loss area for a while, so I decided to keep the trade open and count on the markets getting disappointed with the European leaders’ decision scheduled later that day.
But lo and behold, the markets were satisfied with the agreements! Aside from the banks consenting to sustain a 50% haircut on their Greek debt holdings, the EU leaders also announced that the EFSF firepower will be boosted to 1 trillion EUR.
My USD/CAD parity idea didn’t stand a chance after the release of the good news, and the pair eventually hit my stop loss. Boo!
Looking back, I probably could’ve stayed away from opening a trade and just waited for a confirmation on risk sentiment before jumping on price action. I also could’ve cut my losses early when the price clearly broke below parity.
Here’s the damage:
P/L: -80 pips/-0.5%
What else could I have done to minimize my losses? Got any ideas? Hit me up on one of these pages!
Chips, dips, and let’s grab some pips!
Trade Idea
Even though I missed out on a could’ve been 200-pip win last week and that bounce from parity this week, I could have another shot with USD/CAD since I just spotted a falling channel on its 1-hour timeframe.
Just the other day, the pair bounced from the bottom of the channel right at the 1.0000 mark when the BOC gave a very dovish rate statement. ‘Twas a pity I was in yoga class when that move happened!
Well, I decided that I wasn’t going to get left behind this time. As soon as I saw that the pair was nearing the bottom of the channel again, I decided to enter at market just a few pips above parity.
Fundamentally, there are plenty of reasons why USD/CAD could bounce right back up again. First is the ultra-dovish BOC statement implying that it isn’t likely to hike rates until the end of the year because of persistent global economic threats.
Aside from that, oil prices are expected to stay down thanks to the simultaneous dip in demand and rise in supply. From what I recall in Economics 101, both these factors usually weigh on prices, which we could witness for black crack.
You see, the ongoing uncertainties in the euro zone debt situation and the slowdown in the U.S. are expected to keep fuel demand low in the coming months. Top that off with the prospect of overflowing oil supply from Libya now that the fighting has eased in the country.With that, I figured that the pair could stay above parity in the near term. Still, to give my trade enough breathing room, I set my stop below the .9950 minor psychological support, which is also below WATR.
Here are the rest of my trade details:
Long USD/CAD at market (1.0015), stop at .9935, pt1 at 1.0150. I risked 0.5% of my account on this trade.
Do you think I’ll be able to catch some pips with this one and end the week with a win? Let me know what you think through any of these pages or through the comment box below!
Chips, dips, and let’s get those pips!
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