EURUSD got a thread, GBPUSD got a thread, why not USDCAD.
I didn’t had time to comment it last week but since I am bored today I wanted to share the observation I made Especially about what happened friday during the US session.
USDCAD was very bullish during Jully. Then in August we had high and lows, the pair struggling at the resistance of 1.095.
On monday 25th the pair made a new high (point A on the image). A new high on a monday and despite the bad data that came on the US home sales? That was surprising, to me at least. However after this new high the pair went back down. The price pushed a bit to the stops then fell back. Luckily I never trade breakouts and was bullish on USDCAD so I was observing quitely. The fact that the pair did not explode up at the resistance probably meant a dip would follow, but countertrend moves / short time moves is not what I do.
On Tuesday 26th there was lots of US news, but the pair glided down slowly like nothing happened (point B on the image). Then on Wednesday 27th, which is generally a busy day but which had no big news for that pair, USDCAD fell hard. It felt a bit unatural from the fundamentals perspective to me. Why such a sudden fall? I concluded ‘the smart money’ was purpusly letting it go down to get a low bullish entry. That’s all good, because that is my kind of entry. And I did open a long trade on the end of the day (point C on the image), expeting for a bounce up during the rest of the week or the next week.
On thursday 28th (point D on the image), the news should have made the rally I was waiting. (bad CAD data and several good US data). But the pair didn’t move much at all. It seemed the smart money was absorbing all the volatility. I doubted seriously the strategy that led me to open a long the preceding day. It seemed the pair would go down even more after all. I hesitated to close my trade but didn’t, trying to stay ‘disciplined’, maybe the pair just need more time for the order books to be filled after all.
I found friday very interesting. With the contradictory news on CAD, the pair formed a short reversal just at the level of the week low. Then US data came and it was good. I was happy to see that of course, with the good US data I was hoping this trade could end well after all.
But a few minutes after the good US news, the pair fell hard ‘out of nowhere’, just enough to hit my stop (point E on the image). Well it is my fault, it was a bit tight from the larger timeframe poitn of view. Now the funny thing, just after hitting my stop (and I am guessing, most of retailers stops), the pair went back up to form a nasty hammer on the daily. The pair made a nice stop hunting move on the low timeframe range, most people being long having probably a stop around 1.0820ish.
After all that, is it gonna go up like a rocket now? When my broker closed on friday it looked like that, but I guess I should be ready to be surprised, as always.
Anyway, it is interesting to see how the pair moved against the obvious expectations, ignoring the news for example, but in a general direction that could have been anticipated from a market logic point of view. And how it ate up the stops to bounce back to the ‘correct’ direction.