Wednesday, November 16, 2005

Bearish Pennant

Bearish Pennant

As I posted, I jumped into a trade short term. Eur/Cad is up 44 pips. I have 2 contracts on this pair; I am closing 1 contract and letting the remaining one run. The Eur/Aud contract is still paying its interest and is up 58 pips. The Eur/Usd trade is up 121 pips.

Looking at the Usd/Cad, I have been stubborn about the fact the Usd/Cad should be going down due to fundamentals, yet it has been rising. I have been adamant about oil not going below $58 but it did and then stalled out. If you look at crude oil prices, the price has reached where oil gapped up in March. Frequently a gap in price will act as a barrier (support or resistance). Oil bounced off that level and rose just under 2% today. The Usd/Cad has consolidated, giving spinning top dojis right at the resistance price 1.1975, which has been a barrier 6+ times in the past year. This has occurred in a downward trend, creating the bearish pennant formation. The formation is encompassing 380 pips at the widest point. If the Usd/Cad breaks below the pennant by 10% or about 40 pips (1.1850) the price pattern would set up a move to near 1.1520, coincidentally the trend line going back about 9 months. Add one more technical indicator forming, a bearish divergence on the CCI. If the pair breaks below the 0 on the CCI at the same time it breaks the 1.1850, this is a great signal to go short. I am still very bullish fundamentally for our friends to the north (bearish for this pair). That being said, if it breaks upward above 1.2010, the price could go to 1.2200 short term.

Tuesday, November 15, 2005

Quick entry to trade

Got called out for a few pips of profit. Went short the Eur/Cad AGAIN (3 times a charm) at 1.3971 and the Eur/Usd is still running at 1.1660. The Eur/Aud is still paying out about $1 a day and is up a few pips to boot. Happy trading.