Finally, the pair managed to get above the 10 daily SMA yesterday. I did a stop and reverse at .9939 (-41 pips). This, by the way, gave back my profit on my previous USDCAD trade but there's potentially some valuable information here. First, the pair may be going into a choppy period where traders will get whipsawed. That wouldn't be surprising—there's much uncertainty out there. Second, it could be my earlier interpretations of bullishness this week were correct despite the ominous patterns I talked about yesterday. If it's the former then this trade, too, will be stopped (but at breakeven). I'm not closing out part of it at this point as chasing 40 pips here and 40 pips there is a waste of time. It will either run or it won't. If it's the latter, then basing took place at the lows and there's the possibility of a short squeeze coming up right above parity. Lots of possibilities and the market will sort them out sooner rather than later.
The pair has nudged above parity to 1.0006 so far this morning. I'd like to see a close today above parity.
© 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.