Keep your ears open for headlines
Last night, just before the close, CAD rallied strongly on the back of some positive comments from President Trump concerning Nafta. He said that, 'trade talks were going well'. CAD moved strongly as USDCAD fell into the close. Have a look at the chart below. If you got in within the first 5 minutes, you would have made some points on that headline.
The reality is that headlines opportunities are all around us at the moment. Brexit headlines move one way, and then the other. President Trump is a constant source of headlines too and this is a heads up for further headlines coming into the week; they look set to continue. Check out Justin's excellent reminder regarding Brexit headlines in the must read tab at the side of the feed if you haven't already.
Therefore, it will pay to familiarise yourself with where price is for the USD CAD chart. The drop last night in USDCAD placed the pair at a technical crossroads. Price is testing a broken trend line on the daily chart and sitting on the 100MA. A break below yesterday's lows and the next target comes in at the daily 200MA.
So, be tuned into the news today and use the technicals to define and limit your risk. A break on the low of yesterday's daily low would bring the 200MA in as the next target. Setting a sell on stop could be a good play, as it would most likely be only triggered on further NAFTA developments. If it wasn't, with Oil being well bid, there is some support in the market for exiting if there is no clear catalyst. However, if it was triggered on the NAFTA deal being completed you could hit a home run. The 4hr 100 and 200MA offer a decent place to limit that risk in that scenario. Risks, vs rewards....Sound familiar? Have a great day.