Friday, December 5, 2014

5 Dec 2014: USDCAD daytrade #2

I tried to fade the USDCAD after the NFP and Canadian figures were released awhile ago. This was based on the belief that bulls would start closing their positions before the market closes for the weekend.

Price had hit last week's high and the previous major swing high, forming a nice wick. I went short after the next candle opened, and looked for price to fall quickly. It didn't fall much at all, and stuck around the resistance level. When it kept pushing upwards, I decided to close the trade at a -0.8R loss rather than wait for it to hit my stop loss. Price surged upwards shortly after, taking out the stops above.

There were some warning signs that bullish momentum was strong:

1) The bullish candles on the upswing had very small wicks, especially on top. This showed little evidence of bears pushing back.
2) There were 3+ candles of the same colour
3) Price moved alot quicker going upward than downward.
4) There was no lower major swing high that formed. A lower major swing high would've shown proof of bears competing against each to get their shorts filled first. This would've been a good sign of bearish strength.

(click to enlarge)

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