The USDCAD is interesting. Consider, most of the other CAD crosses have actually been rallying in favor of the loonie (despite the plummet in commodity prices may I mention). It seems that USDCAD was really being held up by the greenback's strength.

In the week ahead, we don't have any significant US event risk, we have the precedence from loonie strength this week, a couple major indicators scheduled for release (both expected to be good) and a major descending trendline.

While I'm a long-term dollar bull (on virtue of its relative value, not its own fundamental standing), I think we may be in store for a short-term retracement.

I just put up our week ahead forecasts on DailyFX. You guys can read more into my fundamental outlook there.

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

I think there's still room for a pullback in USD/CAD, as the pair remains below a falling trendline dating back to mid-2004 (first chart attached). Meanwhile, on an intraday basis, USD/CAD is contained to a falling channel (second chart attached). Currently, the upper end of the channel is near 1.0675 while the lower end is near 1.0535. As a result, those looking to sell the pair may be able to get a better price on a test of near-term resistance. I suppose you could also play the range as well, but personally, I don't like to trade against my longer-term bias.

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Terri Belkas is the author of Daily Fundamentals, Global Central Bank Comments, and Forex Trading Weekly Forecast on DailyFX.com.

here is a different look

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Are you trading USD/CAD, Blaiserboy? Looking to sell at either of those trendlines?

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Terri Belkas is the author of Daily Fundamentals, Global Central Bank Comments, and Forex Trading Weekly Forecast on DailyFX.com.

The system I use does not yet say 'short' on daily. and weekly appears to be retracing .....

So I am not in......

I will be looking for a lower high on the daily before any short, we seem to have a lower low on this bar...... so we can now look for a lower high...... adn if that does not appear...... no entry....... lol

A USDCAD short was actually my pick for the week.

Aside from the long-term falling trendline that you guys have mentioned (which has obviously had success in holding back advances), I think commodities are due for a rebound, the US dollar is likely to see at least a modest pullback, the interest rate outlook seems unreasonably skewed in the Fed's favor, the Canadian economy is clearly performing better and there are a number of top tier Canadian releases due this week all expected to be strong.

All this taken into account though, I still think we have seen a good technical argument for a trend change. Therefore, I don't want to be too cavalier with profit targets.

Anyone else taking the plunge and going short?

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

Anyone following the other two constituents of the comm block: AUD and NZD?

AUDUSD really hasn't had much of retracement since the 1200-point meltdown from 0.98 began. Looking for a move back above.

NZDUSD on the other hand has finally broke a steady trend from the July 23rd collapse and back above a 50% fib all around 0.7085/100. I certainly wouldn't say this is a sign of a bullish turn over the long- or even medium-term, but it could be good for a reduced position size pop. Also looking for where I should get short again. I'm thinking 0.75.

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

Wasn't a recent pick of yours long USDCAD. So who can argue with success. But as Terri stated, I don't like to speculate against my longer-term bias, which is still upward USDCAD. This is a reflection of CAD over-valuation and weakening fundamentals, in my view. US fundamentals are also weak, but that's already been fully discounted.

I have a 4 hour chart here......... and at this time I am not convinced that the down move is ready.

This a wait and see, perhaps for a few days.....(according to me.. hehe)

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Terri.....

A question......

This is hypothetical........ say you were about to enter a short on this pair..... what stop loss would you apply...... do you have a fixed amount or a formula or do you use S&R.......

Can you give me a brief lesson as to your thinking on stops......

I have recently changed from trading the faster charts to daily charts and am still attempting to get my feet on the ground...

Thanks


dave

Yeah, I'm not a fan of going against the dominate trend either. When I did a review of my trades a few years ago, I noticed that my most frequent and largest losses come from trading against the larger trend.

On the other hand, it cam be difficult to determine a larger trend sometimes when price action is consolidating (so you end up staying out the market for a long time). Also, if I merely trade with the large time frame, I end up having dramatically fewer trades that have the technical, fundamental and risk/reward components required. So to reconcile it, I have trade half size and take only those setups that meet most of my requirements instead of just a majority.

I agree that the Canadian dollar was vastly overvalued and that the US outlook has been more or less priced in. However, it seems traders are growing optimistic on the US economy now, but I still think there is a good probability of a recession in the second half (especially if consumer spending continues to fall off and/or the financial markets fall apart). Also, the Canadian economy seems to genuinely have taken a turn for the better; but we need to watch their consumers and housing market.

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

Hi Dave,

For me, it really depends on the situation and what sort of markets we're dealing with. The stops I would use on USD/CAD are extremely different from what I would use with something more volatile like GBP/JPY. But very generally, I think a risk/reward strategy of 1:3 is a safe bet.

However, if there's a range that I want to trade, I maintain very tight stops because if price breaks out of the range, the basis of my original trade has already been negated. I've been busy with a few reports and I meant to post about it this morning, but this is a perfect example: I shorted USD/CAD this morning at 1.0652 with a stop just above the morning's high of 1.0671, looking for a drop to 1.0550.

Hope that helps!

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Terri Belkas is the author of Daily Fundamentals, Global Central Bank Comments, and Forex Trading Weekly Forecast on DailyFX.com.

USD/CAD is still holding to the channel I noted yesterday...anyone trading the pair ahead of the 8:30 EDT release of Canadian retail sales?

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Terri Belkas is the author of Daily Fundamentals, Global Central Bank Comments, and Forex Trading Weekly Forecast on DailyFX.com.

Actually I have put in orders for a small short position around 1.0650. Relatively tight stops as the break of this channel wouldn't necessarily dissaude me from a short-term bearish trade. I'd just reestablish around the major falling trendline at 1.07 (warranting price action of course).

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

I'm looking at the congestion in AUDUSD and a breakout is inevitable. However, the range is still 200 points wide, so it still has room to move (meaning a breakout may take a major dollar move or some piece of big event risk).

Not going to take a bias on the eventual breakout, but the medium-term trend is obviously bearish. A retracement seems highly plausible after that 1,200 point tumble, but I don't know how big it would be. In all likelihood it could turn into a false break to the upside so that more sellers can get in for a better price to confirm the dominate trend to the downside.

Thoughts?

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com