USD/CAD Continues Range Bound

In September, USD/CAD got stuck in a range between 1.0200 and 1.0350. See the chart below.
Some traders may find it difficult to trade but we think it's easy to trade when prices are stuck in a range. We did few profitable trades by taking the advantage of this move.
We bought when price moved to the bottom range and sold when the price went close to upper ragne.
USD/CAD is in breakout watch. We are waiting to see a break above 1.0350 or below 1.0200.
That might happen anytime soon.

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Dollar Index Outlook

Dollar index's strong break of 81.88 support completed a head and shoulder top pattern which suggests that rebound form 80.08 is already finished. Also, note that dollar index has indeed failed to take out 55 days EMA, which in turn argue that whole fall from 88.70 is possibly still in progress for another low 80.08. In such case, we'll be looking at the prospect of deeper medium term decline to 75 level upon breaking of 80. In any case, risk will now be heavily on the downside as long as 81.88 resistance holds and further fall will be in favor. Though, break of 81.88 will save the bullish case that 80.08 is the bottom and will turn focus back to 83.56 resistance instead.

USD/JPY - Japan's Invervention In Currency Market

Japan intervene in the currency market on Sept 15th, 2010. Last time they intervene the market to stop selling USD against JPY was six years back. Please see the chart below.
We were able to get some bite out of it.

 

Our Position Explained

EUR/USD opened a week at 1.2759 which was just below 38.2% fib at 1.2781 (See the chart below). This is second bullish weekly closed for EUR/USD and closed above 38.2% fib. We took our long position at 1.2869 and currently up +23 pips with one lot EUR/USD. You can see that on the chart below. We left the position open for next week, as we expect EUR/USD to continue its upward move.
NFP report came better then expected and investors are getting into more risky assets like EUR/USD. On the other hand, JPY fell against most of the major currencies. We don’t believe it’s a one day action. We placed our profit target at 1.2950 which is just below 1.2993 next resistance. Our stop loss is at 1.2800. That is 1:1 risk reward.


Have a nice long weekend, Canada, U.S.

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