USDCAD—give me a break

This pair's behavior is the type that can cause perfectly decent traders to start frothing at the mouth. It looks like it's building strength and then it doesn't quite perform. My long from Friday (at 1.0527) stopped out at 1.0495 for -32 pips. The behavior is indicative of a confused market. It will find its direction eventually. If it can break above 1.0547/79/85, the uptrend should resume. If it breaks below 1.0407, there may be further lows. I'd prefer a break either way to see which way to trade.

This morning USDCAD touched a low of 1.0431. The .618 retracement of the move up from 1.0225 is here at 1.0436 so this is a critical support level. I just bought a small position at 1.0444 since it's at support and the stop can be tight.

Support:

1.0407
1.0312
1.0367
1.0245
1.0208/25

Resistance:

1.0467
1.0500/06
1.0547/79/85
1.0636/44
1.0771/76/81
1.0848
1.0988


Here's the three-hour chart:



© Dianne Fecteau, 2010. 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.