Thursday, October 22, 2009

USDCAD - Can this dog hunt or not?

Obviously USDCAD experienced quite a steep fall yesterday. My trade was up 257 pips when I posted yesterday and it went above that. Should I have closed out at what was the obvious resistance I wrote about? Maybe. Remember though, I’ve found a style that works for me. I don’t have huge losses to blog about because I search hard for good entry points. I wrote two days ago that I had lightened my long in this pair at 200 pips profit. The rest of the trade was profit stopped at 100 pips which is what I made yesterday. I’m not crying.

But then the question is what to do next. As you see from the hourly chart below, I went long again with two buys. Why? One reason is that it looks to me as though the market is still expanding. Neither price nor RSI has broken their uptrend lines. I wrote yesterday about the deadly nature of orthodox broadening tops. The pair did fall out of what looks like one. But notice that it has now climbed back in (Can I have another chance, Mommy?) instead of hitting its head on the lower line and falling away. That could be a bull flag which would lead to more upside.

Still, I’m not at complete ease with this pair. There’s a lot of sentiment against the USD. My longs are up about 75 pips and I’ve moved the stops to breakeven. We’ll have to see where it goes from here. Here’s the hourly chart:

© Dianne Fecteau, 2009. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

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