Well, guys, I am excited! .. How about you?
I am pumped because the USD weakness has provided some great profit in current trades AND some great potential for future trades.
First, let’s quickly touch base on the USD/CAD short I discussed in yesterday’s analysis HERE.
As you may have noticed, the USD/CAD has followed through exactly as we’d hoped. For a pair that doesn’t tend to move a whole lot, this thing looks like it just got dropped from a plane 30,000 feet up:
I got slightly more aggressive with my entry due to the beautiful test and continuation (Boomerang Formation) that we got just after I posted my article, but the entry was just a few pips different and of no major consequence.
You may also notice that I have already moved my stop to reduce risk. At this point, there is no sense leaving my stop all the way at the top of the channel since we have clear confirmation that Bearish continuation has occurred.
In other words, the only way price is going back through the channel at this point is on a legitimate reversal and I don’t want to be in the trade if that happens anyway.
*Note that I did not move my stop to break-even. A common error is that traders move their stop to break-even when there is no technical reason to do so. Instead, move your stop to a place where it is hiding behind a level of support or resistance so it’s not a sitting duck for the market.
My Target is still a long ways off as mentioned in my last article, but I will be trailing the stop at new highs/lows as the trade progresses… So are YOU in this trade? Let me know.
That’s it for the update on the USD/CAD … Now to the OPPORTUNITY TRADE.
AUD/USD: Daily Strike (HUGE Target)
The AUD/USD has been consistently moving upward for 700 pips year to date. Each pull back brings a new high so far.
Not only do we have a consistent trend building that we can look to jump on (not too early, not too late) but the BEST part of this trade idea is that it is moving right back toward last year’s high which is about 400 pips away.
That means we can enter now on the DAILY STRIKE:
But rather than just targeting the most recent high in the uptrend, we can set our eyes on the 2013 High:
In order to take advantage of the 400 Pips available, I will be setting a Pending Buy Order and hoping for a retrace or centering of this powerful Daily Bar. That way, I can join in at a better price and get the optimal Risk to Reward ratio:
Of course, there is the chance that we won’t be able to get into this trade due to a pending order. But if we are able to get into the trade, I feel that the USD weakness has a high probability of showing continuation and getting us into profit. A full profit should be about a 4:1 R/R as well!
For me, this trade is worth the Risk.
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