I think if we get passed 0.8500 the we could see it fall below 0.8000. The 61.8% Fibo level of the 0.7686-0.9851 rally at 0.8513 is further supported by the 1/23 low of 0.8511. I thought we might be testing these support levels by now, but traders aren't too sure the commodity boom is completely over. The pure mathematics of the potential demand from China and India remains a source of support, and as long as commodities fail to completely collapse support may hold.

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John Rivera is the author of Market Brief, Top FX Headlines, and Forex Trading Weekly Forecast on DailyFX.com.

Yesterday, Wed. Aug 20th posted a 10 day MA/Pivot Cross (to the downside) ... the first one since July 23rd (which confirmed the advance to the upside). This Market has also posted two Reversal Days 1) Aug 12th and 2) Aug 19th with confirming Trail days to the downside 1) Aug 13th and 2) Aug 20th. The 26/9 day Heiken Ashi smoothed has topped out on Aug 19th ... therefore Aug 19th high of 1.0670 is the high to be watching should this Market attempt one more run to the upside. The probabilities are now in favour of a decline to the first level of support between 1.0464 and 1.0484.

It looks like its happening right now. USDCAD broke from a steady, modestly downward sloping trend channel.

I had a short from 1.0640 from yesterday, but was already out for 90 points earlier (the second entry never triggered).

Took on a new short. Stops are a bit wide, so I may tighten those should things get hairy. Very close first target as I don't want to have a full size position fighting the dominate trend on the higher time frame.

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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

Took profit on the first lot on my second time around in the short (65 points) and moved my stop up to breakeven.

Watching the AUDUSD closely. It kind of died around 0.8800, but the chances of a retracement of that sharp drop from late July look to be considerable.

Anyone else looking at the other comm bloc pairs?

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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

USDCAD drop

woah....did anyone see that one coming?

Second lot was stopped out for breakeven on USDCAD. Close to the target but ultimately no dice.

AUDUSD is testing the bottom of its lower time frame range. If you are bullish on a significant retracement of the mid-July collapse (200 points is barely a blip in 1200 points of decline), this may be a good place for entry.

Even if you are dovish, we are just off a trigger point. If this pair doesn't make a move today, we will could have a crazy open next week.

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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

Standing Sell orders are thick below 1.0432 with thin Volume this Monday Aug. 25th. These Sell orders are positions from the recent buyers waiting to see if this last move to the upside will hold ... as well as original long term Institutional Bears waiting to see if the overall Historic downtrend will resume. Equilibrium rests at 1.0454 and is currently Homebase for this Market before one side gives up ... instead of thinking ... before one side takes over, because in any Market ... it is the weak hands that finally decide which way the Market will give. The onus is now with the strength of the Bulls ... will continued buying keep this Market above 1.0432? I will let this Low Volume day post before calculating how many Bears hand over their positions to the tentative Bulls.

Hey leithtec,

What do you think of 1.07 and 1.0330 as significant technical boundaries to your equilibrium point?

I have been reading your posts for a while. It seems you are more of a directional trader than myself and your direction is less dependent on the proximity of major technical levels.

What time frame do you usually follow?

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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

The UPtrend seems to be still in motion, I went long at 1.0463 this morning !

Now Standing at 1.0507, I'm mixed on what I should do. Cash it in or let it roll.

The RSI marks range from around 45 to 65 depending on the Time Range, so there still is place to go up....

Still I have mixed feelings.

How would you guys deal with it ?

For now I will try to ride the trend for a few days, my stop lose is set and if it's reached I will have no loses except for the pips I made when opening the trade.

I just hope it will not come running down but go for a 150 pips

Dear John, Thanks for the inquire. My calculations are taken from end of day data ... high/low/open/close and volume. As I write this, the USD/CAD currency pair has just sailed through 1.0454 and is bouncing up a little. Equilibrium is the = sign ... it is where the Market rests or feels most comfortable. It is where the Market is drawn to. It is the magnetic field. Equilibrium is what any Market is always seeking before the next move. So we have moves toward equilibrium and away from equilibrium or toward a developing NEW equilibrium (if you will). Confused. Don't be. My equilibrium points are taken from end of week data. 1.0454 was calculated using last weeks info. Simple Pivot Point calculations (and the balance points between this Pivot and R1,R2,S1,S1 will give you what you need). Still, what is my logic? My Method was developed through Trading the Soybean Complex. Once I discovered Forex and observed smoother more predictable curves with very small Gaps, I applied my system to the USD/CAD Currency pair. My goal is 30+ pips a day or 100+ pips a week ... which is quite attainable given that this Market moves at least 60+ pips Daily. So, I'm not going after the FULL move. Tomorrow is another day that I can take 30 pips out of. All I have to do is determine the overall direction for Today ... be satisfied with my 30 pips and compound my accounts with strict money management rules. There are other longer term calculations that I use to forecast absolute Tops and Bottoms (as well as weekly Swings)... and I would like to explain these in detail. Let's save that for another day. Oh, one more thing. I have a bias. I believe that the Bears rule. In any Market ... in every Market... the Bears RULE. If a Market happens to go up, it is because the Bears ALLOW it to go up. ALL of my calculations factor in this one premise ... which takes in some figuring with Volumes. Different eh?

Interesting indeed.

A few things I like about your strategy: it has a strict setup; it has defined stops and targets (which are usually ignored by most speculative traders); and it doesn't look for the entire range of any specific period (in fact it looks for a modest percentage of the average range and will likely take that profit within a relatively short time frame).

All of these are vital components to a successful strategy in my book; and consequently, these are the things I usually tell people to do when they ask me about how they should trade (most are usually just looking for a magical RSI/Bollinger Band combination or something that does everything for them).

How long did you trade soybeans for? The person that taught me to trade actually started out trading soybean and swiss franc futures long ago.

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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

Wow, I don't know about calling this a safe uptrend. I don't know what time frame you are looking at (it could be very well a good uptrend on the lower time frames); but the daily is showing a lot of volatility.

What's your time frame and target for the trade? Those are two important components to the trade.

Too much time, and you will head into the potential volatility surrounding the US GDP revision numbers thursday and the Canadian 2Q GDP numbers Friday. As both of these are market moving, there is a far greater chance of a 150-point blowout move.

As for targets, I usually keep mine well within reasonable boundaries. I have been watching a long-term falling trendline that recently crossed 1.07, so that would be what I consider a boundary for now (could break in the long-term - going out beyond a week). Further, I would only take a percentage of the recent range low 1.0420 to 1.07 range.

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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

John !

1 and 15 mins timeframe. I'm new to trading, and making mistakes, learning from them as I go along... It turned out to be not to bad actualy. I felt a bottom was reach at 6am and 8am I waited a bit and went long shortly after it bounced. A little doji candle stick also got some attention

Thank you for taking the time to ask !

As we follow the pair is hard to predict if the USD will reach yesterdays levels. Right now it looks like we have a short term resistance at 1.460 which was tested 4 times in the last 6 hours. I can see a channel formation and the pair looks like will trade in the channel until this morning when the durable goods data comes out. The new range will be 1.0465-1.0435. If you are looking for a quick trade go short to make those 30 pips.
Open for suggestions.

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You are very good, alfa