Oil & USD/CAD - Technical Patterns
Good Morning,
A quick look at fundamentals - claims are hovering above 350k. I am really not sure how easy it will be to get the moving average below 350k. With that, the monthly job creation can't be greater than 150-225k and THAT keeps the Fed in play.
Technically, I talked about using stops to manage your trades in the IBFX Webinar series. I also used an "inter-market relationship" to show a trading opportunity. Take a look at USO - breaking out to the upside as equities creep up and thus demand for oil:
Past performance is not indicative of future results
Now look at the USD/CAD - the USD is getting weaker as oil prices move up and also as we probably get closer to a further weakening of the USD by the Federal Reserve:
Past performance is not indicative of future results
You can see on the 4 hour chart that support at .9900 was broken. I talked last night about using old support as new resistance. In the 30 minute chart, the USD/CAD comes back up to .9895 - 5 pips below that .9900 support/resistance line:
Past performance is not indicative of future results
Here is the fun part. A day trade could set up a trade risking 10-20 pips, putting their stop above the support/resistance line and if the pair moves down to the .9880-.9870 level, they may be looking to take profit off. But as we talked about last night, "massaging" the trade is critical. Currently, the pair is at .9882, so if you didn't move your stop down, you would essentially be risking the difference between the current price of .9882 and your stop of about .9910 - that is 28 pips - much more than the 15 you were originally willing to risk as you used a techincal and fundamental trading plan. Moving stops towards breakeven, into the profit zone and/or legging out (lightening up the position) are all tactics we talked about in the "Using Stops to Manage Your Trades" Webinar.
Oh yeah. I mentioned the "fun part". A longer term trader could use the same entry and initial stop area (or they could risk a bit more in pips as they are a longer term trader). But they may not be looking to get out until the USD/CAD drops 50, 100, 200+ pips, etc... So short term and long term traders can use the same analysis!
Happy Trading and Be Environmentally Cool
Coach Brian
Forex trading is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.
