June 5, 2009 - quick profits with counter-trend trading

Following the setup I was waiting for and posted on June 2nd, USD.CAD broke the sharp downtrend line and stayed above it for a day.


The long-term chart shows price breaking the down-trend line. Now lets focus on the shorter term chart to see the action better.



When price pushed above the steeper downward trendline, it triggered a watch for entry into a trade. The US Dollar then came back to retest the line, which coincided with the latest high. In this scenario, the previous resistance has become the new support line.

I got in at 1.0975 and sold at 1.1111 for a quick profit. Although I would say that this rise may continue for a longer time period, I did not want to over stay my welcome with a long position in a down trending market. After all this was meant to be a quick counter-trend trade.

If the support level is retested and holds I will look to get in again. For now, I am on the sidelines.