USDCAD trend reversal?

I've always found that broader economic themes seem to take the back seat for awhile and then suddenly come to the forefront for almost no apparent reason.

Case in point are the PIIGS. This was old news and had been written about many times in the past. And then - Wham! Suddenly it's the hot topic and moving markets. Seriously, why now and not when it was first reported months ago? I have no idea as to the answer of that...

I often just keep the macro stuff in the back of my head, and take a look at it whence the markets turn an eye to it.

Chances are that the deflation scenario could come about in a few days, months, whenever. But timing is the issue and jumping the gun can sometimes be...annoying at best, disastrous at worst. Reminds me of a part in reminiscences of a stock operator.

This pair has just been schizo. today. I was gonna get short earlier, but just didn't have confidence in the direction today. Sat out...

Hope that long pans out for you! My only concern would be that it looks like it's going to close around the lows...I realize it's Friday aftn., but I am thinking if it stays down here I wouldn't want to be in a position over the weekend. My personal feelings on being either long or short right now.

sometimes when CAD starts to reverse, it take a few days - same when it was at 1.250 - and i do have a TL on hourly that it seems to be respecting, as long as above 1.05 - and 1.05 is 50% retrace from upmove from 1.025 to 1.0780
Not only that but it broke a 6-month down trend, and is retesting TL
http://cdn.forexfactory.com/attachme...7&d=1265907103
Should be start of something big!

Hi Clouds,
Curious if you do not mind, is this a scalping method or do you play a low probability high risk/reward method
There are gambling strategies I have heard of but never really tried any.
My own view is that wide stops have less risk as they allow the time for an idea to work or not depending on the market conditions encountered.
Also the intraday volatility is difficult for me to deal with so my vision tends to be long term.


Vengeance, If one thinks the time is right the only way to know is putting the money on the line. Positioning ahead of the crowd means riding the rails but one never can be sure when the awareness that proves the idea in the market will take root. If the idea is sound and in this case a breakdown in the Euro is deflationary as it puts the burden back on the US economy to perform with a stronger currency. Technicaly the USD/CAD had turned up last week and a position trade has to be held through weeks. Through all the releases and crazinesses that occur in the future to come.

As to the Euro, I remembered a line from the movie the Godfather (great for traders) I think it went as the following "All the time it was Barzini"
Mr. Trichet is saying (All the time it was Goldman Sachs)

If I traded equities i would short the hell out of Goldman Sachs as they have the mark of Cain on them now. This company may have destroyed the Euro.
Goldman Sachs will be selling all employee firstborn at auction next week. Of course it will be in some nation that still allows slavery as it would be legal to do so. Anything for a buck is their moto.

No, not scalping. I'm looking for long-term trades.
Sometimes it takes me 2-3 entrees to get a trade going, but I agree that 20-30 pip stop loss sometimes works better.

Your timing must be impecable.
bye

Not entirely. If I try a trade two times and use 20 pip stop loss, it's same as 1 trade and 40 pip stop loss. I guess I'm more comfortable doing the re-entree than wide stop losses.

Just thought I'd post my offering.
Looking to sell into area marked (previous weekly lows)
Old broken support should become new resistance.

In alignment with the theme of most of my recent posts, there is a subject that is appropriate at this juncture.
To use fundamentals in ones trading what is desired is a perception of the market as it might be a month from now. The outlook to be addressed has to be further then simply asking what's for lunch?

The best situation is to look at a market and ask where are we? Soros proposes that markets are reflexive, they become selfullfilling prophesies. There is more to the theory then this, but at first take the initial read would most likely result in that understanding.

If one can identify a mania and zone in at the extreme, then taking the contrarian approach will produce substantial results as the market turns.
Then having the guts to stay with it while market consciousness shifts.

Jim Rogers former partner of Soros is well familiar with Reflexive theory.
He has been looking for a currency crisis in the U.S. for some time and thus moved all his assets out of the USD. He has said this over the past year repeatedly. So by his actions helped reinforce the move into the Euro and CHF. The SNB have maintained parity with the Euro to prevent an overly strong currency as a result of market demand for the CHF.
We now find that out of fear of the USD the Euro is now the currency with a possible crisis at hand. Is Jim Rogers now running into the CAD?

Identifying major dislocations where fear and greed dominate is one of the oldest questions to be answered. Where does virtue end and vice begin?
Fundamental thinking about the implications of where the market actualy is may be one of the ways to accomplish that desireable goal.

Everywhere the market is of the opinion that the USD can only go down. But the question arises can only go down against whom?
Should we all put our money into Canada or Australia. These are admirable countries but hardly have economies large enough to handle the wealth of the world, without seriously dislocating local communities.

Is the land of the rising Sun the next place? Is China, the leader of the Communist world willing to have a currency appreciate and dislocate the billion plus of its population to what end?

Do we all put our money into gold and watch it glitter on the shelf at home? Do we end up becoming Silas Marner finding redemption in the future?

So we are stuck with the stinky old greenback. If the USD rises then we are surely facing deflation against commodities. Mr Bernanke the man who spent his life supposedly studying the great depression, by his very efforts to prevent one, has created the very situation providing the forest to burn down. The huge buildup in debt that has occured under Greenspan and Bernanke must be wound down. This deleveraging of the economy will take years to unwind and deflationary pressure will continue for some time to come.

Market fear of inflation has driven commodities higher then reasonable and so we have mania. The long USD/CAD or even short AUD/USD (crackup in Asia exporters) trade is a test of the thesis. May be early, may even be wrong, but it is a basis for a trade.

The selling pressure on Euro/Cad seems relentless. Private money moving out of the Eurozone is a reasonable guess. Since there is a U.S. Bk. holiday today there is not much large money trading, so the smaller private sector funds appear to be driving the market.
The Cad/Usd still has a double bottom in place at the 102.50 level. Whether or not it may test that level again is anyones guess. I am also watching the 104.25 level as being significant. That was a prior level of support from 11/11 thru 12/04 2009 It was violation of that level that initiated the profit taking move that commenced upon 01/20/10 and the breakout of the downtrend line that commenced in August was confirmation that an upmove was initiated.
My stop is at the the 103.70 level for a failure of that level should be viewed as a violation of the upmove.
I am viewing the current Cad strength as a retracement of an upmove that has been started.
Others may see this as a resumption of the weak USD scenario vs the Cad

This pair has been hitting all my levels. Sometimes I wonder if it's just my broker who knows all the lines I've drawn and it just teasing me.

Anyways, we're still hanging near 1.0507. My near term down lines are still 1.0468 49 31 and 1.0411. Near term up are 1.0550 63 83 and 1.0604. Need to break 1.0563 for a short term bounce.

With low liquidity today, I'm not gonna give too much credance to any big moves.

Nice going Duce,
luckily for me I have an equal amount of Euro/Cad shorts on so haven't really been hurt by the Cad strength against USD.
Don't really understand what is keeping up the Euro but tommorow is another day.

EUR/USD is finding support at 1.3580 session lows. Central banks are likely buyers, as they have been the whole way down. 1.3500 barriers are said to be quite substantial and linked to in-the-money options, so they will be defended very vigorously. That means that if EUR/USD trades below 1.3500 before the options expire, 1.3900 and 1.3600 EUR puts would cease to exist.
Why do traders buy options with knockouts attached? They make them cheaper. Often much cheaper. If your option can suddenly disappear, it is obviously less valuable than one which exists until expiry.

Thanks Jerome, That 1:3500 level is really a big event when it breaks.
The Euro still looks like a dog to me and is also the key to a stronger USD.

Am thinking about the possibility of the Yuan being revalued. Guess it is possible they will tip the hat to Obama. But if they revalue and then the USD still goes up China will not be happy, so it may not be a foregone conclusion they will act.

Great input Jerome! I love hearing people's insights on the options...Want to start trading forex options in the near future, so the more info/insight, the merrier.

Cheers

Market is too quiet, something pending maybe. Closed the eur/cad short so am directional on all long Usd positions, including usd/cad again. Euro/Cad didn't do much today and looks overextended.
Any tightening out of Asia will hit commodity currencies. China Bk. Holiday so no chance of much from gov't tonite.
Will stay with scenario
Weak numbers from NZ

Orphanides article implies that the ECB has reached the end of the line in options. Euro cannot carry the world as an export destination. It requires domestic consumption and a growing economy.
Canada and Australia are not able to pick up the slack with stronger currencies. We are back to the US picking up some load for world growth to occur. A stronger USD is not what Obama wants but what he is going to get.
My scenario was calling for this to have deflationary implications, since world growth can only come from falling raw material prices at this time.
The US private economy cannot expand debt due to the fragility of the banks and the lack of qualified borrowers.
Evan Bayh failing to run is an indication that taxpayer resistance to expanded US Gov't spending is taking hold in Washington.
We are at the time the market has to choose the outcome.

If anyone has another take on this please by all means make a post.

I feel there is more trouble ahead. Countries (PIGS) are falling apart and there will be a need to run into safety. Which currency has been tried and tested? The US Dollar. I know there are many arguments for the depreciation of the us$ but is the british pound any better? or the euro. The Yen can only do so much. The Rminbi is artificial and is 100% committed to the us$.

Now us$ apprecation means deflation. deflation leads to stagnation and stagnation leads to depression

By the way i am not an economist. I am a chart trader but it is wise sometimes to have these fundamental issues at the back of one's mind