- POTW: Plan of the Week
- Red: High impact news
- Orange: Medium impact news
- OCO: One Cancels Other trade. More than one trade entered. First one to trigger cancels the others.
Monday: 0830 USD, 1030 CAD
Tuesday: 0830 CAD
Wednesday: 1400 USD FOMC Minutes
Thursday: 0830 USD
Friday: 0830 CAD
- Bank of Canada, Wednesday 10/24
Ignore the chart showing entry at 1.3040. I had to close and reopen the position from 1.2797. The position is up over 200 pips.
ACTION: Add to the position ahead of Wednesday FOMC Minutes.
USD.JPY also shows a decade-long cup and handle formation, one of the most reliable trading patterns.
ACTION: Let the Daily settle and seek entry between 111 and 110 for a long term hold. Same strategy as USD.CAD.
- High/low base breakout is one of the highest probability trades.
- I believe this is a bullish continuation pattern.
- Limit entry at the bottom of the base with a tight stop below the breakout point.
- Sell stop OCO at the breakout point in case this runs bearish.
- Buy stop OCO entry at the bullish breakout point to double the position on breakout.
Fundamental Bias: Strong USD
I believe that the Fed and Trump Administration are orchestrating a strong Dollar policy that will play out over the coming years at the expense of emerging markets worldwide. We can expect a restructuring of US healthcare and Social Security, the return of a strong middle class due to automotive, defense and high tech manufacturing especially including steel, aluminum and 3D printing.
Technical Bias: Strong USD
The charts show strength in the USD against both CAD and JPY. USD.JPY is still correcting. Both charts show one of the most reliable patterns, a cup and handle formation, on a decade-long monthly chart. Timing the entry on multi-time frame trades is always tricky. On CAD, we’re in. On JPY, we’re waiting for the Daily to settle or smooth before entry. We’ll re-evaluate USD. JPY ahead of Wednesday’s Meeting Minutes.
To that end, I will look to add long-term leveraged positions to USD.CAD and USD.JPY, and take shorter term opportunistic trades in other pairs such as GBP.JPY.
Trade / Results:
Open Position: Long USD.CAD
Target Exit: Long-term hold, 1.47
Gain / Loss: +200 pips
USD.CAD is consolidating in a 50 pip band between 1.3079 and 1.3132. Stop loss moved up to 1.3075. If the pair reverses, it’ll be only for a 50 pip move before moving sharply higher on anticipated Bank of Canada dovishness. 50-day support on the 4-hr chart is at 1.3035. Re-enter at that level, a full measured move south.
Be prepared to take profits on tomorrow’s 0830 CAD news with a tight stop and reverse position through Wednesday’s BOC decision of next week.
After Action Review
- Maintain tighter stops on charts that are elevated well above the Daily MA in order to lock in gains or seek to enter on pullback.
- The Administration is working in concert with other officials to actively manage the currency and prevent aggressive breakouts. Enter positions at pivot points .
- Patience. When a pair is extended and you anticipate a pullback, set the ambush and wait to trigger. De-lever and allow for room to move so as not to be stopped out.
- Huge measured moves that seemed highly unlikely have occurred on two occasions, both of which, had I set the ambush entry and waited patiently would have yielded enormous gains. Set the ambush and wait.
- On light news days, play the 5 & 15 minute chart with a News Trail (10-pip trail on a 20-pip trigger).