Why the sudden reversals with CAD?

Hullo everyone. I have a question that I hope someone may have an answer for, but first would like to introduce myself. I have being visiting Forex Factory for many months, and find it a great forum with excellent news. I have been trading a micro account for a while and am finally getting my account balance to go up, and have appreciated the trading wisdom that everyone has shared. Thanks, and as my experience grows I hope to contribute more. What has worked for me is trading less frequently, paying attention to the news as well as technicals, and using multiple time frames.

Now my question. I noticed last night that CAD/JPY made a sudden reversal at precisely 01h30 EST exactly (Nov 30), holding the peak price for only 15 secs, then dropped 12 pips in the next minute, and continued to fall for about the next hour. On a 30 min candlestick chart, the result was a tweezer, without any upper shadows, quite rare in forex. What I did not understand was why the peak occured exactly on the half hour. Looking back, I see this happens several times a week with currency pairs involving CAD, such as CAD/JPY, EUR/CAD and USD/CAD, and at all times of the day or night, but usually precisely on the half-hour or hour. I do not see it on non-CAD currency pairs that I have looked at, such as GBP/USD or USD/JPY. It looks very artificial. Is this perhaps automated trading by a big player taking place? I would like to know what drives this, as it worries me trading a pair that behaves in this way.

I did search the forums, but couldn't find any comments on this behaviour. Look forward to hearing from anyone that has some ideas?

Gord

Could it be news releases for CAD? Did you confirm?

The solution for this myth is very simple....Don't trade CAD related pairs

I don't mean this of course...I can't give you an explanation for this, but I can assure you that at the end of each hour, sometimes, in many pairs, you might see an artificial move....Some insane market makers might be trying to fix the shape of the candle or to fix the close of the candle at the last 30 seconds for their own favour....Of course, this is of no use to anyone except those who are watching the pairs tick by tick....


Thanks,

Nader

Looking over the last couple of weeks for CAD/JPY, it does not seem to happen near the news. For example, yesterdays occurrence was 1 1/2 hrs after the relatively unimportant JPY housing starts data, and midway between CAD news anouncements. The JPY news never moved the price much.
Gord

Actually I would say it and mean it. CAD is a rough currency to trade IMO. You might be better off sticking with EURO or Cable and lowering your size to compensate for the increased volatility. I even find some of the wilder crosses, like EUR/JPY, easier to trade. CAD is heavily tied to commodity prices as well as Econ data which makes it more difficult to trade unless you are very commodity savvy.

Do you disagree, Nader? You seem to be much more commodity/emerging market savvy than I am.

This is true to some extent as I trade gold, silver & oil heavily as well as the major indices futures...In fact I trade the USD/CAD as well...I believe that the CAD is a different personality currency in this world...It is a very complex currency which is being tied to many things at the same time....Many of these things are actually contradictory...

For example, the CAD is tied to comodities, specially oil, gold & uranium...However, it is also tied to the USD & the whole Canadian economy is tied to the American economy...When the American economy gets strong, the Canadian one gets strong too & vice versa...The CAD currency also depends like any other currency on the strength of the Canadian economy....

So as you can see, there are many complex & contradicting factors that affect the CAD currency...For example, during 2006 when the USD was appreciating against all currencies & all currency traders were USD bulls (Except for Warren Buffet for sure who was a USD bear & a GBP bull), gold was also rising, the US economy was stronger & the CAD currency was the only currency going up against the USD....

On the other hand, when the USD started to go down against all major currencies & when gold started to go down, the US economy was slowing down & oil prices got hit, so the CAD stopped appreciating against the USD...

Now, oil prices are stable in the $60 levels, gold is going up but the US economy is getting weaker & weaker and although the USD is being hit against all majors, it is appreciating against the CAD which might seem strange to many but not for me...If the US economy gets weaker, the Canadian economy gets weaker & the CAD gets even weaker & since that the primary economy is the US for Canadian Businesses, the USD will get ahead against the CAD....

From a technical point of view, I can see that the downtrend of the USD/CAD is almost getting an end although the USD might go down against all majors in the near future...


Thanks,

Nader

If you follow COT data it shows that the long term short bias reversed 3 weeks ago.

Jon

Ya I watch those nice reports every week, but they are too late....Many times there are lots of actions on Wednesdays', Thursdays' & Fridays' that might paint an unclear picture of the COT report we are currently seeing...

For example, take the GBP/USD futures for example...This week, although a huge number of long positions were initiated for sure & a huge amount of short positions were covered, I am sure that we shall see only a moderate rise in the long positions as most of the move happend after Tuesday or on Tuesday itself....It might be tricky in many times, that's why I consider the long term COT trends rather than the week-to-week fluctuations...


Thanks,

Nader