Over the years I’ve seen the Canadian dollar do some bizarre things, but today’s price action was just plan loonie. If a trader can have an arch nemesis, mine is any currency paired with the Canadian dollar. Earlier this week I blogged my suspicion that USD/CAD would find it’s footing around the $1.04 level. Today, the currency pair sold down to $1.0395 followed by a vicious rally. Where the daily chart winds up closing may be a game changer regarding trend on the long time frames. Bargain hunters beware.

Personally, I played this trade totally wrong. I read the demand level incorrectly and placed my long order at $1.0440. In retrospect, I should have played the round number tightly, and demanded a better price. Using last week’s low, $1.0410 would have been a much better long play. Regardless, I was expecting my trade would be stopped out this afternoon, but to my surprise the dollar rallied.

I didn’t expect the response to be as decisive out of $1.04 as it was. While the rally was impressive, USD has yet to clear the daily high supply zone which concerns me on a long position. If USD/CAD fails to clear and hold the $1.06 handle, I don’t think the bulls will have much long term success. On the daily chart, you’ll find the next significant demand level around $1.03, a long way to fall. Still, the USD/CAD has found buyers along $1.04, which is also a 61.8 percent retracement on the move from $1.02 to$1.08. It feels like a zone of indecision to me. Tomorrow the market will see Canadian Retail Sales data, and U.S. CPI data, which may help break this currency pair loose.

Since I botched the entry so bad, and my plan was poor overall, I decided not to look a gift horse in the mouth. I took profit on both lots a few moments ago putting another 47.8 pips in the till. My attempt at trading the weekly low was a short term trade idea, so I figure why give my arch nemesis a chance to fight back? Had I played the round number correctly, I’d be more than willing to hold this trade longer.

I hope your having a great trading week, best of luck!

Ryan