USD/CAD head and shoulders pattern
Hi, everyone. Let us look what daily trends we had in financial markets today. I hope you still remember me talking about bearish pattern (head and shoulders) in usd/cad pattern. It wasn’t false this time and US dollar plunged today in most currency pairs. Usd/cad wasn’t an exception and you could trade head and shoulders reversal pattern profitably. Breakout occurred during European session and let us see what possibilities you had to trade it.
How you could have traded it
The first one was simply to take a breakout trade when 0.9770 level was broken. Your stop in this situation would have been at 0.9810 level. However, we knew that there was news of medium importance coming at 12:30 GMT (Retail Sales). So, the second possibility was to wait for news and to place a sell stop order below 0.9750 level. When news came the pair went up a little, but after half an hour it continued going down and is at support now. You could also profitably trade cad/jpy and gbp/cad. Eur/cad wouldn’t have been that profitable because euro was pretty strong today. However, commodity currencies (and euro) were the strongest today. So, you should play against US dollar and Japanese Yen. These are two weaklings for the current week.
EUR/USD continues its upward trend
As eur/usd has been strengthening for a few days it was worthwhile checking its’ behavior before and during European session to see whether there are any possibilities to go in the direction of a trend. As you remember we wait for pullback in an uptrend to enter back to a trend. When news came from Europe the pair fell, but quickly formed 123 pattern on 5 minute chart and came back to its’ bullish position in no time. As you may see negative news in an uptrend are great possibilities to add to your position.
So, from 9:20 till 10:05 GMT a reversal pattern was formed and you could jump back on a long trade in eur/usd at the breakout of 123 pattern at 1.4337 level. The pair then took previous days high and is still staying above it at the moment. Resistance is at an even number 1.4500. We will have to watch carefully price action at the level to see whether there is going to be a reversal or not. There had to be (Greek Parliament Vote of Confidence) at 21:00 GMT, but I have not seen any news or reaction of the market about the event yet.
Important data for tomorrow could create daily trends for the rest of the week
Tomorrow is a big day for British pound (Bank of England Minute) at 8:30 GMT and US dollar (Federal Open Market Committee Rate Decision) at 16:30 GMT, followed by Ben Bernanke’s speech at 18:15 GMT. I expect a really volatile day tomorrow and possibly volatility will continue till the weekend. As there will be no more major news releases after that, those two events will set a tone for the remaining week. Don’t overload yourself with day trades for you might end up having big losses. Better watch market reactions to the news.
Read my previous post:
Today’s post:
Disclaimer
Trading financial markets carries a high level of risk, and may not be suitable for all investors. All information on the blog is of educational nature and cannot be considered as advice, recommendation or signals to trade in any financial markets.