USDCAD—Now that’s a bounce!

I blogged yesterday that if my Elliott Wave (EW) count was correct then USDCAD should not dip into wave 1 territory which would have put the low at 1.0430. The low yesterday was 1.0418. Do I toss the EW scenario? Or do I look for a sniveling way to preserve it, such as, “It’s only 12 pips.” Forget that question. I also blogged yesterday that I wasn’t sure I had the stomach for a long but I was looking at it. I did go long at 1.0435. My reasons were:

1) The pair looked like it had completed a five-wave move down which would have completed leg C of the ABC correction
2) Basing is a process as I’ve said many times. I was comfortable with my calculated correction levels from last week. This meant a tight stop was possible.
3) The pair broke above the downward RSI trend line. You’d really want to wait for price to confirm this but I believed we were at a low—no doubt the erstwhile EW count as in my head. Is anything perfect after all? Also, I’ve been tracking this pair closely the last 30 days. It “felt” as though it was ready to move up. (The “just had a feeling” factor which is normally dangerous but, hey, I’ve been in bed with this pair and if you can’t trust your bed partner…Oh, never mind.)
4) USD looked as though it was gaining on Euro (see my prior post on the Euro)

We’ll have to see how this plays out. I’ve moved my stop to over breakeven since I’m up 102 pips as of 7:45 EST. Here’s the three-hour 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.