March 9 - USD.CAD Trade Setup

Of the currency markets I've been looking at the USD/CAD patterns. Following the volatile swings of currencies in 2008 and early 2009, it has come into a calmer trading range. Below is a 1 year plot of the USD/CAD currency exchange:


In this recent trading range we have a resistance level at around 1.075 and support around the 1.025 level. With USD and CAD trading near parity, there are a lot of fundementalists who beleive that CAD is still undervalued to the USD and that it will once again trade higher than the USD - in the long run.

This, however, is not a blog dedicated to long-run fundementalists. Short-term swings are what I'm interested in!

With the tripple bottom pattern set up here at the support level, I look to enter into a trade long USD against CAD. I will enter into half my intended position today and look for further confirmation for the other half.

In this scenario, as with any breakout scenario, there may be a false breakout before coming the trends go back to their original patterns. A good trader will always keep that in mind when trading breakouts or against them. Here I am looking for price action to stay within the band and stay in range.