Update on the USDCAD (+ others) and few thoughts about Swing Trading
Last week I made a multiple time frame analysis on the USDCAD. All charts were pointing up and I thought it was a good idea to look for long opportunities.
Guess what? Since then, the USDCAD has been going up :)
Last week I got a few emails asking me if I’d close my trade over the weekend and last Fridays CAD news announcements (I think it was the CPI)…
My answer was no. I’ve talked about it in the last few weeks, how I’m going to handle news announcements this year. In essence its like this:
I’ve noticed that when there is an important fundamental announcement, most of the time the market will move in the direction of the market condition. I always trade in the direction of the market condition, so if I have enough pips to set my SL to the break even level, I’ll always let my trades run, even during the most important ones.
Now, this doesn’t mean that the market will always move in the direction of the market condition. Sometimes the market will move agains it, specially if the actual figure is way off the expected figure.
But that is a risk I’m willing to take. I took this decision after analyzing the market reaction to important announcements when I closed my trades during 2012.
What do you think about this? Are you with me or would you rather close all your trades?
Now, I think this is the way to go for Swing Traders, if you want to capture most of all those swings you’ll have to learn to hold your trades during important announcements and over the weekends.
I know it’s difficult to hold your trades. Specially when the market has moved on your favor, there is a natural tendency to “want” to close your trade and grab those pips already on your pocket.
We feel like those pips are already ours. Why would we let the market take them away from us?
But we need to learn to be patient fellow trader.
Otherwise it will be impossible to capture all those market swings.
If you cant, try closing your charts, doing something else, close your trading platform, etc.
We need to be patient to wait for our signal to trigger, but most importantly to wait for the market hit our take profit order.
If you find it difficult to do, try doing some trade management, reducing your risk (i.e. taking partial profits), or trailing your stop loss, etc and give your trade the opportunity to hit your order.
If on the other hand you are a short term trader, without a doubt you need to close your trades, without a question. Alright?
Ok, now to the USDCAD
The USDCAD is still in a bullish condition, and I can confirm this by looking at the long term chart, in this case the weekly chart:
Still clear isn’t it?
So I think it will continue its way up until it reaches the next LT resistance level which is at 1.0450.
¿Agree with me?
Two weeks ago I also analyzed the GBPUSD and thought it was in a clear bearish condition, and the GBPUSD fell like a rock…
And let me tell you, I was surprised to see the GBPUSD break the bottom of the range that fast:
And now that the GBPUSD is trading below that level, it has plenty of room to continue falling, at least until it reaches the next LT support level which is at 1.4383.
Now, take in consideration it is currently trading at 1.5350, so it has a long way to go before it reaches its long term support level (more than 700 pips).
Here is how the hourly chart looks like:
It would make sense to wait for the market to break the short term support level (1.5088) to start with your trades.
If you try this trade, let me know you did it ok?
The USDJPY traded in between The SF Box for about two weeks, but yesterday it broke through the lower extreme level:
Here is how it looks like:
As long as the USDJPY keeps trading below the short term resistance level (green level at 92.22) I’ll be looking for short opportunities.
All take profit orders should be placed just above the next LT resistance which is at 89.00. The USDJPY is currently trading at 91.62, so we have plenty of room to plan and take our trade.
Do you close your trades before important announcements? What do you think about my approach to handle news announcements?
What about the USDCAD or the GBPUSD? Do you plan to trade them? What about the USDJPY?
What other currency pairs are you monitoring?