The Weekly Update: The Canadian Employment Data

As we have noted in our prior weekly market analysis we were expecting a strong Euro in the Forex market. The recent rally was triggered on Friday by Yellen and the French elections’ news. We are still unable to to note an imminent USD strength in the market but we will wait for the European Central Bank (ECB) monetary policy on Thursday to determine USD trend ahead of the Fed monetary policy Should Mario Draghi trigger a heavy USD selling it may alter the technical angle of our projections as well as the Non-Farm Payrolls (NFP) on Friday. Aside the upcoming French elections Germany is due to hold its elections later this year as well as possible early elections in Italy. In regards to GBP, in recent months we have been stating that all the speculations on a soft or hard brexit are nothing but speculations and that the real impact will be derived from the negotiations that will follow the triggering of Article 50. Hammond suggested that the private negotiations that are currently taking place with EU members have positively improved. We are uncertain whether the weight of these remarks will have a significant impact on GBP at the of the Forex market.

CADCHF 4hr Chart

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CADCHF Strategy

We have stated that we will consider to re-enter AUDCHF in March. The recent dip may act as a re-test of the breached resistance, however, we are concerned we will drift in a drawdown in AUDCHF and risk and meaningful profit to only materialize next week. We cannot fully determine if a bearish  retracement may occur prior to the gain and decided to avoid AUDCHF for time being. We have noted a 4hr entry in CADCHF. The positive divergence in the Relative Strength Index (RSI) may be sufficient to suggest corrective gains in the cross. At first glance the gains are expected to be corrective rather than a major trend reversal.

USDCAD Daily Chart

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USDCAD Strategy

As opposed to CADCHF, USDCAD appears to be positioned for a daily reversal. In similar reversals we cannot determine whether the daily high of Friday’s session will be re-tested by the market. The re-test, if it indeed occurs may take place within the next 48 hours. Unless a significant bullish gap takes place at the opening we may either wait for Monday’s close or layer an entry order (sell limit). As opposed to prior entries this is not a drawdown we would like to absorb if it indeed takes place. We will cautiously state that it may be in early indication to the upcoming Canadian employment data on Friday, which may be the trigger for a strong CAD. An intraday entry in CADCHF may not necessarily suggest CAD strength also be reflected in USDCAD as it may be as a result of a weak Swiss Franc initially.

We will issue an update on our signals after the opening of the Forex Market (22:00 GMT).

CADCHF Trade Alert

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CADCHF long at market price (0.7533)
Take profit: 0.7665
Protective stop: 0.7479
Risk Ratio (RR): 1 : 2.2 (approx.)
Estimated duration: 5 days

Note: We will wait for corrective gains in USDCAD although such gains may not materialize. The required stop in USDCAD is above the daily high, which we find excessively large. We will settle for CADCHF for the time being and review USDCAD during Monday’s session.

EURNZD Trade Alert

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EURNZD short at market price (1.5077)
Take profit: 1.4795
Protective stop: 1.5195
Risk Ratio (RR): 1 : 2.4 (approx.)
Estimated duration: 4 days

Note: This is an early entry, which means we are taking a risk of drifting a -50 pips drawdown (approx,), which is not guaranteed but must be anticipated.

06/03/17 UPDATE: Shortly after we issued an update to shift CADCHF protective stop to 0.7528 the spread widened to +40 pips, which triggered the protective stop at minor loss. We are not re-entering or opting for USDCAD as we would like to control the current market exposure.

07/03/17 UPDATE II: EURNZD triggered the protective stop loss order, ending the the trade with a loss. We did not re-enter the position.

USDCAD Trade Alert

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As our exposure has been reduced we are opting for USDCAD. Please note that despite the potential link between London’s bomb scare and GBPUSD recent weakness we are not re-entering GBPUSD.

USDCAD short at market price (1.3427)
Take profit: 1.3230
Protective stop: 1.3488
Risk Ratio (RR): 1 : 3 (approx.)
Estimated duration: 4 days

NZDCHF Trade Alert

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NZDCHF long at market price (0.7027)
Take profit: 0.7160
Protective stop: 0.6985
Risk Ratio (RR): 1 : 4 (approx.)
Estimated duration: 7 days

Note: This is 4hr entry, the potential drawdown is a re-test of 0.7005. We did consider waiting for a slightly lower price (10 pips lower) but the potential drawdown is minimal.

08/03/17 UPDATE: USDCAD triggered the protective stop loss order. CAD weakened against a basket of currencies following heavy selling in crude oil.

AUDCHF Trade Alert

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AUDCHF long at market price (07632)
Take profit: 0.8130
Protective stop: 0.7530
Risk Ratio (RR): 1 : 5 (approx.)
Estimated duration: 30 days

Note: We decided to increase our short net exposure to CHF. This trade is a re-entry to AUDCHF as we stated at the end of last month.

09/03/17 UPDATE: NZDCHF may re-test the daily low after the 4hr close. Although we are not keen on widening stops but we are lowering NZDCHF stop to 0.6973. This is a +12 pips increase. Please note there is no guarantee such a re-test will take place.

09/03/17 UPDATE II: NZDCHF triggered the protective stop, AUDCHF is the only trade we are holding at the time of this writing.

15/03/17 UPDATE: AUDCHF is trading at 0.7710 at the time of this writing, we are closing 20% of the long trade at market price. We cannot shift the stop to the entry as greater distance is required.

20/03/17 UPDATE: AUDCHF is trading at 0.7720 at the time of this writing.

Please click on the chart to enlarge:

We are closing 20% of the long trade at market price. We are likely to shift the protective stop to the entry after the daily close once the spread stabilizes (stop was later shifted to the entry).

21/03/17 UPDATE: We are shifting AUDCHF protective stop to 0.7628 despite the minimal distance from the market. If the trade is stopped the profit was made from the partials’ realization and positive interest.

22/03/17 UPDATE: AUDCHF triggered the protective stop, we have ended the trade with a fair profit.

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Last Updated on October 15, 2021