CADCHF – Failure at 77 Cents

CADCHF – Failure at 77 Cents

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CADCHF -- Failure at 77 Cents

The Canadian dollar is under pressure today despite the turnaround in oil prices. The U.s. dollar is strong and investors are still worried about President Trump’s tweet about oil prices being too high last week. The unexpected drop in wholesale sales this morning put pressure on the loonie. This number isn’t closely followed but is a reflection of the overall demand. USD/CAD has broken above 1.2800 and is testing 1.2850. The next stop should be 1.29. At the end of last week, softer retail sales and consumer price growth reinforced the Bank of Canada’s caution. Although CAD policymakers sounded slightly less pessimistic this afternoon, they remain worried about NAFTA and feel that underlying issues are evolving well enough to send an unambiguously positive signal to the market.

Technically CAD/CHF is looking very ugly with the pair closing last week and opening today below the 200-day SMA and first standard deviation Bollinger Band. CAD/CHF should drop to 76 cents and if it falls below that, the next stop should be .7560, which is just above the 20 and 100-day SMA

CAD/JPY Points of Failure

CAD/JPY Points of Failure

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CAD/JPY Points of Failure

The Canadian dollar should be trading much lower and the only explanation for today’s CAD strength is its strong trend and a slightly larger increase in Canadian 10 year yields compared to U.S. yields. Oil started the day sharply lower after key producers failed to reach an agreement to freeze production but the losses were short lived as reports of a strike in Kuwait sparked a U-turn that briefly took prices into positive territory. However the Kuwaitis were quick to respond, bringing in workers from Egypt and Bahrain to resume production and by the end of the day reports that output from the Northern fields have returned to normal sent oil prices back into negative territory. All of these conflicting headlines took the Canadian dollar on a rollercoaster ride but if we take a step back, production in Kuwait will be back to normal before we know it and the hope that oil producers will take steps to create a floor faded when the Doha meeting ended. This means oil prices will remain low creating ongoing pressure on Canada’s economy that should translate into weakness for its currency. We expect CAD to peak soon and begin a stronger correction. Meanwhile the rally in stocks drove the Japanese Yen traded lower against all of the major currencies. Although we could see a slightly stronger recovery in USD/JPY, gains will be limited as the downtrend in the dollar remains intact.

Technically, there’s a tremendous amount of resistance for CAD/JPY above current levels. Today’s rally stopped right at the 100-day SMA and above that we have the 23.6% Fib retracement of 2014 to 2016 decline followed recent spike highs and then a cluster of highs below 86.35. Support is at today’s low and then 82.

Thank You Failure

Boris Schlossberg

For those of us on the North American continent this is the season of Thanksgiving and on this holiday I always recall the most extraordinary speech of gratitude I ever heard. It was my high school graduation and our science teacher gathered us in the school auditorium and instead of plying us with the usual platitudes about how “the future belonged to us” and how “this was the greatest generation, in the greatest country on earth, at greatest time ever …blah, blah, blah” simply said “appreciate failure, it’s the most powerful force in life”.

“Think about it for moment,” he said.” Success is nice. We enjoy it, we may even revel in it, but once we achieve it we pretty much forget all about it and move on. Failure however, we don’t forget so easily. Failure in fact is what drives all of us forward. Failure is why get up in the morning. Failure is why fight to live -- because if it wasn’t for failure -- why would be bother to do anything?”

Forty years after I first heard those words they are just as revolutionary today as they were when I was eighteen. In fact I think it’s safe to say that no advice was more responsible for my success that this simple speech that praised failure. It completely re-oriented my view of life because it made me realize that success was just the endpoint of endless steps of failure and if you really wanted to succeed you had to not only accept but embrace failure as the starting point of every activity in life.

In trading this can best be described by my methodology of what I call “Lose your way to Profit”. Whenever I design a new strategy no matter how smart, how well thought out, how well tested it is, I inevitably lose money when I first start trading it. Real markets are never like the ones on the chart and whatever insights you may have obtained from past price data, they will always have to be amended by the present day experience.

But unlike most retail traders who give up on their systems after 3 or 5 or 10 losses, I continue to trade, continue to tweak, continue to observe. Eventually after the fifth, the tenth or the twentieth stop out some small inkling of an idea appears. I adjust. I trade again and I do it over and over and over until the losses become less and less and eventually turn into teensy little profits and finally into steady gains.

This is how I did it with my VT system. This is how I am doing it now with my latest strategy -- Ping Pong and this is likely how I will trade for the rest of my life. In fact if I ever come up with a system that was highly profitable right out of the box, I would be highly suspicious of it and most likely it would go into a permanent tailspin sometime in the near future wiping out whatever gains it garnered.

Trade with me and FX traders from all over the world. LIVE. Every Day.

This is what many novice traders fail to understand. No system will ever work well out of the box. Success in trading strategies is always dependent on the combination of core ideas and market experience. That’s why we should never give up at the first sign of losses. As my high school teacher pointed out a long time ago , we should give thanks to failure -- it’s what drives us forward in both life and trading.

USD/CAD – Potential Failure at 1.20

USD/CAD – Potential Failure at 1.20

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USD/CAD – Potential Failure at 1.20

Taking a look at the monthly chart of USD/CAD the currency pair has obviously had a very nice run. The 1.20 level is a psychologically significant level for the pair and one that was a former support turned resistance in 2005/2006. If you take a look at the daily charts you will also see that in 2008 when USD/CAD first made a run for 1.20 it’s rally fizzled at that level. We think the same will occur this time around especially since oil is oversold and approaching its own trendline support. While 1.20 is a psychologically significant level, 1.2120 is a key Fib level that should contain gains. This explains why our stop on the USD/CAD Big Short Trade is above this resistance. Should the currency pair pullback, there is no support until 1.18.