USD/CAD continues to trade in a 280 point descending channel breaking below the 50% mark yesterday. This morning the chart indicates the pair was rather uncomfortable testing the $1.070 level and I believe this sets up a decent range trading opportunity to test the lower ranges of the channel again.

The fundamental picture for USD/CAD is evenly matched so I don’t expect any huge breakouts over the next day or so. Friday we will see Canada’s employment figures for April, should they surprise to the upside that may give this pair some bearish strength.

I think the continuing question will be “How weak is the Dollar?” rather than “How strong is the Loonie?” This morning’s housing report didn’t surprise us at all but oil inventories were on the upside considerably.

Either way I still think this is a decent short; my stops are above $1.080.

Note: The comment on my screen shot should read “Wait for a break below minor support” instead of “resistance”.

Good luck,

Ryan

Hello everyone! I apologize for the delay in posts but I’ve been very busy trading and preparing to take the Series 3 test to become a CTA, more on that later.

Tonight I have some quick, random thoughts to share.

Question: How many of you think $1.60 is on its way? How many of you are shorting $1.5860?

USD/JPY Trade Idea

My morning paper (yes I still read a paper) told me WaMu is the latest house of cards to get billions they don’t deserve to keep their doors open. Upon reading this I thought to myself risk aversion will be flooding into the market today since just earlier this week the “experts” filled cable network time proclaiming the worst was behind us.

Here is the short trade…

Good luck!

-Ryan

Forex dealers registered as FCM’s must submit a monthly financial report to the CFTC which select parts of are published. I highly encourage you to keep tabs on the financial status of whatever FX dealer is holding your risk capital.

The report is available here: http://www.cftc.gov/marketreports/financialdataforfcms/index.htm

As if the U.S. Dollar didn’t already have enough problems this just came across my news wire:

The greenback fell to an 18-day low against the Chilean peso during Thursday’s mid-day trading in New York. As of 11:55 am ET, the dollar was at 438.60 versus the Chilean peso, down from a high of 450.35 hit in the earlier session.

-RTTNews

It can’t be good when even the Chilean Peso is beating up Dollar! If you think gas is expensive, just wait to see the price on Chilean Sea Bass come June!

Most traders understand the classic adage “trade with the trend, the trend is your friend until it bends” yet few actually heed this advice when faced with a strong trend. Fooling themselves into thinking they can predict the end of a trend, they trade against the trend only to be run over by the market again and again.

Let’s get some perspective on EUR/USD shall we? Since February 8^th Euro has rallied roughly 1,300 pips against the Dollar. Following the trend over the last 26 days you would have done well buying EUR/USD. Even if you came to the party late, long EUR/USD was a good strategy.

Tonight I pondered with disbelief FXCM’s Speculative Sentiment Index on EUR/USD. According to the data 62% of traders are still trying to fight the current bull trend by holding short positions! I find it amazing that traders continually step in front of trends and lose money stubbornly trying to predict their end. EUR/USD will eventually slow but wait for proof the trend has broken before you step in front of the Euro Express again!

I can’t believe my last post was January 21^st! Shortly after that trade I packed up and moved 2,000 miles putting a crimp in my blogging routine.

I spent my childhood living in the Seattle neighborhood of Ballard and after stays in Oregon, California and Texas I have returned to the Evergreen State, loving every rainy minute of it. Texas may have “hill country” but whoever coined the phrase “Texas is God’s Country” apparently believes God never visited the Pacific Northwest. If you never visit Seattle, you’re missing out on something special because the Puget Sound region is absolutely beautiful!

I arrived about a month ago and have made following observations:

1. The guys at High Plains Diesel Service in Amarillo, TX were a lot of help when my Penske truck broke down in a Wal-Mart parking lot.
2. Texas didn’t have Peet’s Coffee & Tea. I’m officially finished with Starbucks.
3. The house I grew up in hasn’t changed much but the streets seem narrower, I must be wider.
4. The weather radar on our local news is lame compared to Texas; but Seattle doesn’t regularly have weather that will kill you.

I experienced some frankly terrifying thunderstorms in Texas and one tornado but I will miss the sights and sounds of Texas thunderstorms. It is hard to describe the appeal of something so dangerous; you just have to experience a powerful squall line to know what I’m talking about. There is a lot of beauty in thunderstorms like the below photo I took from my back yard.

But overall I am glad to be in Washington and even happier to be back to the business of FOREX trading!

Seattle Skyline Photo Credit: jacobC

Last week I pointed out a sell trade on the GBP/JPY opportunity and the trade is about to reach our profit target. This short sell was a wild ride on Friday but managed to bring in over 400 pips in two business days! You just have to love the volatility of this pair!

I hope you were able to hitch a ride on this one!

Ryan

Quick update on the channel sell I posted earlier this morning. If you got short this morning, I would consider moving your stops to break even now or taking some profit ahead of the Consumer Confidence report due out in 50 minutes.

If USD/CHF breaks below $1.0975 I full expect this pair to run to the bottom of the channel but best to protect some profit now.

Best of luck,
::Ryan

The dragon lady has been on a freefall over the last three weeks! Support appears to have been found around $207 on the weekly chart but the pair is trending in a descending channel on the hourly which sets up this potential short trade. I think as long as the carry trade continues to implode and risk packs up its things and runs from the stock market GBP/JPY will continue to sell off and probe $207 again sometime next week.

Good luck and remember GBP/JPY is a volatile pair and usually requires larger stops for room to maneuver so if you don’t have the risk capital, stay away.

::Ryan

I like this descending channel sell trade setup USD/CHF is presenting this morning. I’d prefer to sell this pair with the channel following a clear candlestick pattern near the top of the channel. What kind of candlestick pattern? I’m so glad you asked! Bearish Engulfing, Doji, or Tombstones would be great!

The other possibility I might consider would be buying a retracement to the top of the channel if the pair breaks out and closes above the channel.

Good luck!

::Ryan