USDCAD—dropping

USDCAD is dropping after a bearish evening star candle formation on the daily chart (circled that on the chart below). Last week I blogged about the ending diagonal or descending wedge on this chart—it's outlined in blue. I would expect the upper line of this formation to serve as support at .9815 or the pattern will be invalid. However, to get there it must drop below the .9838 prior low. That would be a bearish signal so selling is likely to push it further down. How much further down could it go? .9753 is the price at the bottom of the downward sloping rectangle; the Feb. 2008 low was .9711; the triangle that began in May has a target of .9549. Then, of course, there is the gruesome 2007 low of .9058 but I don't think we have to worry about that just yet. Still, unless the dollar begins some sort of miraculous rally, the pair could be seeing .9549 if it breaks below .9815/00. If so, one would want to sell on a rally, perhaps to .9916.

Here's the daily chart:












© Dianne Fecteau, 2011. 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.

USDCAD—stop and reverse

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.

USDCAD—can't reach daily 10 SMA

.9984 was yesterday's high which rebuffed it again this morning. I closed the remainder of my .9860 trade for +40 pips. In an over-excited market for the Euro, it's not likely this pair can get far. I shorted at .9898.

I won't bet the bank on it falling too far but there are some ominous patterns. First, an ABC on the hourly yesterday, targeted .9966 if C equaled A (.9745 if it was 1.618A). Since it faltered at .9935, it looks as though this short-term may be over.

Second, if one looks back on the daily chart, there is a triangle that began 4/21/2009 and which the pair penetrated below this past October. It retested the lower boundary for some time and then seems to have begun declining in earnest down to this week's low of .9838. The price target from this triangle is a .9549. I never look at just one thing but when I was running some fibs late yesterday, I discovered that .9561 is the .618 retracement of .9058 (2007) to 1.0374. The two prices are very close together. The downtrend line I began drawing 12/21/10 comes in around this level as well if I extend it. I also have targets from Point & Figure charts that are lower than this although I think they're somewhat unrealistic.

What about the wedge pattern I wrote about yesterday? It's there. Wedges can occur during long downtrends. As I wrote yesterday, in a declining wedge, prices generally break upwards because the steep angle is difficult to maintain.

If one considers it as an Elliott ending diagonal then as price action narrows in the fifth wave, it breaks upwards. I've marked waves one through four which I believe ended with yesterday's high. Now this five of five should break down no further than .9805 or so. Price would then break up and out. There's a rule for ending diagonals that says wave four always ends in the territory of wave one. If it ended with yesterday's high it has not done so. Prechter and Frost's book on Elliott Wave Principle note one exception to this so I'm not sure how they can call it a rule but there you go. Otherwise this qualifies if you consider it occurring in the fifth wave down from the 1.3065 high in March 2009. OK, if that's what it is then prices will break upwards fairly soon, the pair will overtake its daily 10 SMA (currently .9907) and there will be a nice rise in prices. One has to see the break happen first, with a close above .9947. Same is true if we drop the Elliott blah-blah and just treat it as a wedge. If it does break upwards, there's a zone of resistance in this area up to parity, consisting of moving averages, price highs and lows, and fib confluence.

There's also a slight positive divergence on the daily chart although divergence is everywhere it seems and this one has been going on since last March.

Bottom line, I'm short with a tolerable stop (not too much risk even if it breaks upward). We will have to see.

Here's the daily 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.

USDCAD—little bounce

In typical knee jerk reaction, the USDCAD bounced from its overnight lows of .9838 based on the non-news of Bank of Canada not raising its interest rate. .9911 has been its high so far. This past Friday's high was .9913.

I bought at .9860 earlier this morning. My thinking was that the pair had been pushed down to ridiculous lows and that there was small risk because the Jan. 2008 low of .9841 and the May 2008 low of .9820 would presumably serve as some kind of support. I also have a little calculation I do when I can't easily see support that had given me a low of .9850. I am not necessarily in the trade for the long-term. Let's face it—the actions that pass for economic policy in the USA, along with a general greenback aversion, have seriously weakened the USD. I took some quick profits but I'm leaving some of the trade on as there's a slim chance the pair could rally to at least parity or better.

Why do I say that? On the daily chart, the pair formed a wedge pattern (or maybe an ending diagonal in Elliott Wave speak). In a declining wedge, prices generally break upwards because the steep angle is difficult to maintain. Things don't usually go straight up or straight down. I don't use any pattern as a signal by itself but the signal would come from a wedge with a close outside the trend line. In this case, one would want to see a close above .9947. Obviously, I did not do that. Breakouts are tricky in Forex. There's a zone of resistance in this area up to parity, consisting of moving averages, price highs and lows, and fib confluence. There's also a slight positive divergence on the daily chart although divergence is everywhere it seems. Therefore, we will have to see.

I don't try to call bottoms or tops but sometimes with what seems like a key low or high, I will take a trade if I have other reasons for doing so, i.e. patterns, divergence, etc. These are higher risk trades by definition since one can't usually call a top or bottom. Even if all the reasoning is right for a reversal, the market can outlast the trader, slowing bleeding them to death with a series of probes lower or higher. This is why if I take these types of trades I usually have a very tight stop. I sometimes set the stop beyond my "real" stop so as to not get taken out in stop hunting but if I do that then I babysit the trade. This is not something I like to do. Babysitting tends to make the trader more anxious than they need be. In addition, you can't just pick a stop willy-nilly because an unexpected event could cause it to be hit. Thus, even when trying to keep a stop from stop hunters, one must consider the risk and not choose a level that would result in too great a loss. The best policy (and one I follow 99.98% of the time) is to set the real stop with the trade. If your analysis is good, the market will usually respect it.

Here's the daily 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.

USDCAD—basing

USDCAD's behavior indicates a price base in the 9978/29 zone. In addition, unless price closes near that zone, the November candle on the monthly chart will be a hammer. Since its shadow low is at support it strengthens the pattern. RSI on the monthly chart has maintained good levels as well which hints the trend is turning to bullish. Hard to believe, I know, and there are certainly no guarantees with the banana republic economics that seems to pass for economic policy in the US but I can only report on what I see on the chart.

The pair is currently nearing its November high of 1.0262 so one could buy on a pullback or a break of that price. Stops will depend on risk/reward calculations but shouldn't be below 1.0095.

Here's the monthly 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.

USDCAD—twirp

I don't mean twirp to be testy as in something that's contemptible although the thought crosses my mind. I meant it as twirp—the USD is like a small bird twirping in a tree. Perhaps the bird is about to be devoured; perhaps the tree will fall from the mighty ax that stands in for economic policy these days—QE.

OK, USDCAD broke down below last week's inside week—not good. The low is 1.0082 so far. The key support is the weekly hammer (three weeks ago) at .9981. Below this could see a resumption of the overall downtrend. I'm not convinced this is going to happen, though. For one thing, you have a nice morning star pattern on the weekly chart with that hammer being the middle of the three-candle pattern. Still, convinced or not, the pair needs to overcome 1.0249 and better, 1.0374 to make a credible case for recovery. Waiting to buy is the conservative course here and of course if it breaks that hammer low you wouldn't buy at all.

Here's a weekly 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.

USDCAD—monthly

I haven't blogged about this pair in a while—that doesn't mean I haven't traded it but I can only write so much as I write the blog for free. Price is currently at the bottom of an upward sloping channel. Yes, it could be a bear flag as the pair gets ready for another drop down but there are other interpretations. Time is about equal for the up and down legs of the move so I'd expect a move up. If it went to the top of the channel….well, let's just say that would be a nice tidy profit but I'm thinking that 1.0658, the lower of the three consecutive candle tops (July through September), is achievable. In order for this to happen, the pair needs to scale 1.0374. If you didn't get in at the breach of resistance last week, entering around 1.0130/40 would be at the .618 retracement of the most recent short-term move up. The stop can be fairly close below .9977 (the lower shadow of October's candle).

Even if you're overall bearish on this pair, seeing this as an ABC correction, leg C would have to be up. At .618 of A (1.9058 to 1.3065) that would be a nice long. However in this view it's not clear that wave B is over.

The weekly chart (not shown) showed that last week was an inside week. This indicates indecision but since the pair also breached resistance at 1.0230 (Oct 8th high), it could also signal a bottom is in place. We'll just have to see.

Here's the monthly chart (my trades don't show on the monthly chart because I use a different charting package for weekly and monthly charting).











© 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.

USDCAD—rebuffed at 1.0668

I'm still long from 1.0472 but of course if the decline continues my profit stop will be hit.

Yesterday made for two days in a row that the pair failed to break 1.0668. The long upper shadows on each of the daily candles was ominous as this hints that higher prices are being rejected.

History shows this is a significant price for USDCAD. If you look at the arrows and the line I've placed on the weekly chart below you see that this little price zone has acted as both resistance and support (polarity). If it breaks upward then there is additional resistance up to 1.0856 although there's significant upward potential given the triangle I've been blogging about and which you can also see outlined on the weekly chart.

As of now, even though its dropping, the pair is still above that triangle. It's still above the 10, 20, 50, 100 and 200 day moving averages. The low so far is 1.0544, just below Fib confluence of 1.0586. This is lower than yesterday and the day before. Below 1.0540 looms 1.0480 (the breakout point), 1.0450, and 1.0389/50. Resistance is at 1.0668, 1.0700 and 1.0856.

Here's the weekly chart. My trade doesn't show because I use a different charting package for weekly and monthly charting.










© 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.

USDCAD—resistance

I'm still long from 1.0472.

The pair is managing to stay above the triangle and above the 10, 20, 50, 100 and 200 day moving averages but it's still having a hard time. So far it has touched 1.0668, a measly four pips above yesterday's high of 1.0664. Fib confluence is still beckoning as support at 1.0586. Also around there is the short-term uptrend line from yesterday on the hourly chart. Finally there was a shooting star candle at the top and with negative divergence on the hourly chart, we may see a drop to at least the 1.0586 area.
Below that would be yesterday's and today's lows of 1.0557/74 and below that the breakout point of 1.0480. All five of the previously mentioned moving averages are clustered between 1.0345 and 1.0452 so there's a support zone lined up. Resistance is at 1.0668, 1.0700 and 1.0856.

Here's the one-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.

USDCAD—broke upward from triangle

USDCAD, after 16 weeks of forming the symmetrical triangle, finally broke upward yesterday with the breakout point around 1.0480. I would not be surprised to see a retest of this point if it's really going to fly but we'll see. In its climb to touch 1.0664 so far today, it also broke above fib confluence at 1.0586. It looks as though it's heading back to retest that point. I may add another position at that point although I took partial profits this morning at +165 pips. Caution is required because of the slightly negative divergence on the hourly chart.

Resistance is at 1.0664, 1.0700 and 1.0856. Support is at the short-term uptrend line of 1.0550, 1.0515, 1.0480/60. Much below that would call into question the validity of the breakout.

Here's the one-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.

USDCAD—update

I've taken partial profits at +40 pips and have moved my stop to breakeven.

USDCAD—weekly

USDCAD is at the top of the weekly triangle and it's possible the pair will move down to 1.0160 which is the uptrend line. It's also possible that it will break above and resume a longer term uptrend from late 2007. Short term behavior is encouraging that it will break upward but of course one must consider the ever dwindling liquidity in the August market.

Here's the weekly 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.

USDCAD—update

My long from 1.0258 profit-stopped out at +81 pips. Clearly, the pair lost its fight with the strong resistance it encountered yesterday.

© 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.

USDCAD—fighting resistance

I'm still long from 1.0258. The pair is still moving sideways and is fighting some strong resistance with a fib confluence and a price resistance zone. In addition, on the weekly chart below you can see a downtrend line from March 2009 coming in at 1.0491 and the shorter-term downtrend line from May coming in at 1.0537. The pair will have to battle resistance up to 1.0677. If it clears that then price moves could become interesting. The low Friday was 1.0351 and had I been trading I would have probably added at that price.

Support is provided at 1.0400/0392 (fib confluence, polarity, 200 daily SMA), 1.0350, 1.0320 (10 and 100 daily SMA), 1.0298, 1.0274, 1.0205, 1.0152, and 1.0075. If the pair can climb above 1.0677 I'll post more resistance levels.

Here's the weekly chart. My trade doesn't show because I use a different charting package for longer term charting.










© 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.

USDCAD—sideways at resistance

I'm still long from 1.0258 although the pair has largely been going sideways since I took some partial profits yesterday.

Price achieved 1.0494 before falling back where it is now hovering in an area of Fib confluence of 1.0464. This means it faltered near the top of the triangle at 1.0499 (1.05 also significant as a round number and is intertwined with polarity and Fib confluence). Ahead is the entire strong resistance zone of 1.05 to 1.0677. What it does with this resistance is going to most likely tell a very interesting story.

A pullback is more than likely given the overbought status of RSI (over 70) on the three- and one-hour charts. There's negative divergence on the one-hour chart (not shown). Ideally, this pullback would be contained by 1.04 which is roughly the 200 daily Simple Moving Average (SMA), Fib confluence, polarity, and the short-term uptrend line. Additional support is at 1.0298, 1.0274, 1.0205, 1.0146, and 1.0108.

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.

USDCAD—update

Just took partial profits of +208 pips on this trade.

USDCAD—still rallying

My long from 1.0258 is still on although it came uncomfortably close to being taken out yesterday in the dip to 1.0298. However the pair rallied nicely.

The price so far has reached 1.0439, higher than the prior 1.0385. With this the pair has exceeded the 200 daily Simple Moving Average (SMA) of 1.0395. Around that level was also Fib confluence and polarity so it's a nice achievement. Still ahead, though, is the 1.05 to 1.0677 area of resistance. The angle of the line upwards is also very steep and it's difficult to see how the pair can maintain it.

Support is at 1.0298, 1.0274, 1.0205, 1.0146, and 1.0108.

Be cautious getting into trades. Markets are less liquid and there are lots of conflicting signals.

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.

USDCAD—rally

My long from 1.0258 is still on and I just took partial profits at +104 pips.

All currency pairs can be tricky especially in illiquid market times which the August market tends to be. However I used classical technical analysis which is freely available to learn—techniques such as support and resistance, patterns, and candle behavior.—things in other words that don't rely on the mystical and "sacred" techniques others put forward with little evidence. This combined with risk management is what results in successful trading.

The price high so far has been 1.0385. This is well above the 100 day Simple Moving Average (SMA) now at 1.0311. The pair is also back inside its triangle that has been so apparent lately. However, this pair is still not on a roll until it overcomes some dreaded resistance ahead. The 200 SMA is at 1.0397 and at the same price level is Fib confluence, and polarity. So it has to make it through that. Then there is the 1.05 to 1.0677 area of resistance. If the pair should head down again, support is at 1.0311/300, 1.0274, 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.

How could you get into this trade if you're not already in? Today might be tricky with the Fed policy statement coming up but you could wait for a pullback, perhaps to the 100 SMA. With the pair oversold according to RSI on the shorter-term charts, this is possible. Or you could wait for a breakout of the 1.0397 area. If you go long you want to watch the trade around the 1.05 mark and perhaps lighten up or take profits. If one is bearish, you could short at 1.0397 with a tight stop. I'd watch momentum carefully before shorting. Regardless, caution is in order. I can't say it enough. Markets are less liquid and there are lots of conflicting signals.

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.

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.

USDCAD—testing breakout point

Even with the push up to 1.0306 on Friday, we've had five days with a close beneath the breakout point. It appears to be retesting it at the 1.03 level. It's definitely hesitating. The pair has also closed below its RSI uptrend line on its daily chart. One could try a small short here with a tight stop above the price line.

On the weekly chart, the pair formed a doji with last week's low. That low (1.0108) has to hold for there to be continued upward price movement. A dip (or close) below it will invalidate it. The triangle on the weekly chart, after a downtrend, suggests there could be continuation. However, the longer term uptrend line from the low of 2007 (in green on the chart below) is coming in just above parity. From an Elliott Wave perspective, wave two could be ending as well which implies longer term positive price movement. Certainly a lows near parity would be a buy signal for me.

The August doldrums may mean sluggish price action could continue for a few weeks with largely sideways movement. If the pair makes it back into the triangle and moves upward, 1.05 will probably contain it.

Here's the weekly 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.