USDCAD—short-term long

I've just gone long at 1.0258 based on the hourly chart. My reasons for doing so are:

1) The drop from overbought (over 70 on RSI) hasn't appeared to cause a large drop in price
2) It's at the bottom of a small range (1.0262 to 1.0306)
3) There's a bull flag on the hourly chart (I've traced it in blue)
4) Ability to have a tight stop (below 1.0250)

Somewhat of concern of course is the testing of the breakout point I wrote about on the last post. So one needs to be ready to bail out or possibly reverse.

My price target is 1.0500 which is the top of the triangle I wrote about in the last post. Resistance before then is at 1.0397/400 which is 100 DMA, a fib confluence zone and near polarity. If the pair heads down then support is at 1.0205, 1.0146, and 1.0108. Below that there's support just above parity from the longer term uptrend line on the weekly chart.

Here's the hourly 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.