Bank of Canada meeting brought no surprises, largely as expected. BoC decided to leave interest rates unchanged at 0.25%. As a matter of fact they projected the low interest rates policy to remain in places longer, in order to farther stimulate economy. At the same time they extended warnings about strength of Canadian Dollar. Appreciating currency, in words of central bank, could more than offset any positive developments in general economic conditions. They will watch currency markets with concern, blah, blah, blah, and take necessary actions. More blah, blah, blah. Like an old record stuck in a track that nobody wants to flip over, because the song on the other side might be even worse.
Loonie responded to the announcement by getting weaker. I guess market expected either stronger language or a commitment to higher interest rates. Loonie fell against all currencies. Even though the move was fairly large, couple hundred of pips against the majors, it was relatively orderly. One thing about news coming from central banks other than FED- they don’t really create this panic atmosphere, with wild spikes both ways, soaring spreads. When the move starts, it has a tendency to continue for couple of hour or so. Pound has been getting stronger lately and GBP-CAD formed decent buy set up. Some time after BoC announcement breakout happened.
I have been looking at this chart for couple of days, but didn’t want to place any orders before the meeting. Once the cat was out of the bag, direction became clear and I placed a buy order at 1.7035, with 120 pips objective. Few minutes later trade was on. Price accelerated nicely and target was met in about an hour. While GBP ran out of steam, CAD just keeps getting weaker, mostly against USD.
Speaking of Pound, in the next post I will discuss EUR-GBP developments, follow up to the Chart similarities post. For now my attention drifts away to AUD-NZD.
This pair has been very choppy lately. Long term, daily chart, shows a down trend, which is gaining ground in a very torturous fashion. Bounces(reactions) are very big, in relation to primary(action) swings. For most people it is difficult trading environment. Smaller time frames are somewhat better, with cleaner breakouts. I want to try one here, using 4H chart.
Market created support at around 1.2250, with 100SMA also drifting into that area. Should the price fall through that level I want to be in at 1.2242, looking for about 140 pips or so. In reality, this cross can go either way, but I think that if the bearish move happens, it has high probability to reach my objective.
Mike K.
[...] Read the rest of this great post here [...]
I don’t really see anything interesting in aud/nzd, but have learnt to pay attention to your observations. It is very unlikely I’ll be taking this trade, but I’m curious about estimated duration for it. What do you think, how long?
Good to see you back in the hunt for eur-gbp pips. I see more categories, too. Looks like evry trade will be sorted out by currencies involved. Correct?
H. if the trade happens, it will likely be a quick trade, 2 days or so. But the entry price must be reached first.
Correct, Andy. From now on I’ll try to categorize every trade under each currency, Should be easier to look back at my past ramblings. But it could make the category list too long. Will see in a few weeks.
Andy says, “…Looks like evry trade will be sorted out by currencies involved.”
I thought I knew what he meant until you responded:
“From now on I’ll try to categorize every trade under each currency…”
Also, I can’t find the recent post where you talk about bounce (reaction) vs : I can’t remember the word you used but it was the true direction. So you got the bounce on EUR/GBP and you talk like you can see entry points by looking at the daily chart. What I’m needing is more info about the difference between a bounce and the true direction with respect to the 4hr chart.
I’m a retard. It was right above.
I see…..
Be nice.
Always.
[...] ” plenty of talk not much action” principle applies to trading as well. Like my AUD-NZD trade from couple of days ago. I decided to close it for 19 pips gain, rather than 100+ originally sought. [...]