USD/CAD Holds at Psychological Level

Friday, May 11, 2012

Good Morning,

The "guru" of risk management Jamie Diamond hits us with a monster "mistake" that could filter through to the markets at some point, but for now, the support level at 1350 in SPX is still in tact.

Fundamentally, inflation was "tame" today, but as we all know, that number is a non-event as the Federal Reserve doesn't care what it is. Next week is a very, very light week on the calendar. We do have retail sales and claims in addition to a smattering of earnings reports. Other than that, keep your ear to the wires for international announcements.

Technically, as I mentioned, the SPX which overnight was below 1350 is now well above it. Could we have another "famous Friday rally" where all risk is taken off and buyers step in? If that is the case, we could get a EUR/USD and GBP/USD rally and maybe, just maybe, at the top of the day's ranges you may be able to look for resistance to come in where the USD is slightly oversold. That seems to be the case lately - equities dive, the USD goes up and then slowly, equities rally and the USD weakens. But at some point, equities stop rallying and the USD stops weakening and you can find DOUBLE FALL LINE TRADES. Trust me, and you have seen this too: the USD just gets weaker and weaker and weaker and it doesn't come back in line even when equities stop moving, so stops and proper account and trade risk are mandatory as there are no guarantees.

Moving further into technicals and trading strategies, you know that I look for the LUNCH RUN TRADE on Friday's. Was the bounce at psychological support at .9950 in the USD/CAD it? The USD/CAD is diving down due to a positive report out of the CAD economy (employment data). But a 100 pip move is pretty big these days (see the other trading ranges in other major pairs today) and so sometimes, support (or resistance) can be found at psychological barriers which are half pennies (.50) and full pennies (.00) when a pair has moved more than normal. For the time being, support in the USD/CAD is at .9950.

Past performance is not indicative of future results

Happy Trading and Be Environmentally Cool

Coach Brian

Forex trading is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.

Posted By: 

Brian Kahn

Brian provides regular commentary focusing on the relationships between various financial markets. An experienced trader and portfolio manager with over 15 years in the markets, Brian relies on fundamental and technical analysis to create trading plans for each and every market entry.