USDCAD—Boring

USDCAD is holding right between or at my two purple support lines I indentified earlier this week. This is good, not because they’re “my” lines but because there has been no follow through on the sell-off from Wednesday. Given the sentiment against the USD, given the relentless upward march of commodity prices, and given the seven-month downtrend, this is nothing short of remarkable. Or maybe remarkably odd. What it may suggest is that nobody has the faintest idea what to do.

On the daily chart below you see the pair holding support for now. The uptrend line is coming in at 1.0474. Yesterday, I posted an Elliott Wave (EW) count on the USDCAD three-hour chart. On that chart I concluded we were either at the beginning of a third wave up or still in a wave four of one correction. If the latter is true then price cannot drop below 1.0430 or the wave count will be invalid.

The uptrend line on the daily chart is coming in at 1.0485. Ideally, the pair will not break below that uptrend line. Also ideal would be RSI climbing above 60.26 because it would indicate bullish momentum.

Another interesting thing on this chart is the time (in days) of the current rally. It didn’t quite exceed the prior down movement before stalling. Ideally it will resume. If so, it would be another hint the seven-month down trend is reversing. All we really have on the daily and three-hour charts are some clues, nothing definitive.

As to trading this pair, of course I bought on support yesterday (filled at 1.0623 and 1.0639). The trades have been above and below water. Currently one is up 10 pips and one is down 7 pips as of 5:57 AM EST. Perhaps there will be a definitive move after Non Farm Payroll (US) and Canada’s employment data this morning. Not that either of those should hold much in the way of surprise.

Here’s the daily chart. I’m not showing my trades on it because they would obscure the recent, small candles.

© 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.