USDCAD - Short opportunity at resistance but beware NFP
USDCAD is at the top of a corrective wave and bears are clearly lurking around the 1.3100-1.3200 area. The pair has sold off 6 times from this area over the past 4 months.
There are multiple bearish signals forming at this key level on both the 4hr and daily charts. Mostly likely the only reason this market isn't moving is because there are major news announcements later today for both CAD (Avg Hourly Earnings) and USD (Non-Farm Payroll). Traders are clearly waiting for those announcements before entering their positions.
It's a tough one. This presents me us with both great opportunity and great risk. I'd usually stay well clear of major news, however USDCAD really is showing some great bearish signals at a very strong resistance. I feel fairly confident that the pair will move lower, but the NFP tends to cause a rather violent spike in price which means traders should have a generous SL, making the trade far less attractive in terms of risk/reward.
So instead of entering now or on the break of the pinbar, I'm going to place a stop order just under the resistance level in the hope that price touches it and fills my order at a much better price, then set my SL higher (above 1.3200). Of course the risk with this approach is that my order doesn't get filled and I miss the trade completely, but hey, it's the only way to get the decent enough R/R to make the risk worthwhile.
Let me know if you have any better ideas.
Good luck!
4hr Chart
There are multiple bearish signals forming at this key level on both the 4hr and daily charts. Mostly likely the only reason this market isn't moving is because there are major news announcements later today for both CAD (Avg Hourly Earnings) and USD (Non-Farm Payroll). Traders are clearly waiting for those announcements before entering their positions.
It's a tough one. This presents me us with both great opportunity and great risk. I'd usually stay well clear of major news, however USDCAD really is showing some great bearish signals at a very strong resistance. I feel fairly confident that the pair will move lower, but the NFP tends to cause a rather violent spike in price which means traders should have a generous SL, making the trade far less attractive in terms of risk/reward.
So instead of entering now or on the break of the pinbar, I'm going to place a stop order just under the resistance level in the hope that price touches it and fills my order at a much better price, then set my SL higher (above 1.3200). Of course the risk with this approach is that my order doesn't get filled and I miss the trade completely, but hey, it's the only way to get the decent enough R/R to make the risk worthwhile.
Let me know if you have any better ideas.
Good luck!
4hr Chart
Trade closed manually:
Closed position manually after price started reversing due to profit taking around 1.2900 mark. Unfortunately I didn't reacted quick enough and gave back around 35 points, but still a great trade overall.
