Fundamentals seem to suggest fears of bears are overblown, and Canada is in much better shape than traders give it credit for. Positioning shows hedge funds have been net short since July 2017, and gradually covering shorts until now. Most of the unwinding happened after we closed over this area where stops where waiting, most likely, and is almost dont, since they are close to flat according to the Commitment of traders report.
This observation had escaped me, when I made the previous chart, could make a big difference, if we encounter sellers at the monthly resistance around 1.31. If not, the short unwind might take us higher, but it is unlikely given that it would take time to break the resistance, and this would nullify the squeeze thesis. I closed my longs and I wait to short around the 1.31 mark. This would be a position trade, so, we won't use a stop and size the trade to risk 1% of our account with a very wide invalidation for the trade to give room for .
As a bonus, oil seems to have gained support thanks to the situation in Venezuela lately, and the chart we now have a new weekly mode for a possible contiunuation of the weekly and monthly rally. Upside in oil is significant, but it's risky to trade it, compared to this trade in the $CAD.
Best of luck,
Price rejected from the monthly level. I will average in for the other half gradually. I'll be looking to enter a daily short as well, with a tight stop and low risk additionally.
I added, will add to shorts in the next 2 days as well as placing a separate short term entry with a tight stop today when confirmed in the hourly chart.
I'm short with a cost basis of 1.28884 for the long term position, we had covered with a profit of 0.12% before.
Looking to take additional shorter term trades with tight stops on the way down, here we have a possible daily opportunity in the making.
This could take a break and retrace, I'm out with a nice gain.
Sadly closed before hitting the target on a fake out but target hit nonetheless, should monitor it to see if it acts as support, or if we get a new trend continuation signal to rejoin the downtrend.
Target zone for the retrace hit, added to short. I'll add some more for 2 more days after today.
I'll add two more entries in the next 2 NY sessions.
Shorted once more, tight stop possible, long term entry also valid with stop above 1.32 zone.
Cost basis is around 1.3023.
Reshorted with 1/2 position at market open.
Placed a sell stop, if we break down I'll short here.
Overall, $CAD has room to catch up to oil, so we have a lot of upside in this trade probably.