What’s happening with the Canadian dollar? (continued)

Last week we talked about the Canadian dollars massive bear movement, it has taken up the best part of 3 months.
We noted that recent support had been broken and we would soon be seeing $1.25. One week later, and we are here sitting right on the precipice of another bear charge, but will there be a recovery first?

This was always my assumption, the AUDUSD hitting 0.80 and retreating, and then the USDCAD coming down to 1.25 and holding for me can only mean one thing: soon it’s going to move, and it’s going to move quickly.
I would always recommend that someone trends with the trend, when the currency comes down to support and bonces, it gives us another chance to sell. This time however, we are looking at a 1 year low and a 2 year high, on the USDCAD and AUDUSD respectively.
Personally I was expecting a rather large retracement yesterday, or today, when we came to this level, but today we are still sitting and pushing the boundaries on both pairs. The USDCAD looks to be pushing its way through slowly. This could spell trouble for traders who were expecting that bounce, and means we need to be ready to get out and be ready to sell any pull backs as it heads downwards.

So what now? For the moment it’s still teetering on the edge; there is money to be made in patience, so watch like a hawk and you could be cashing in sooner rather than later!
LONG: Stop losses should be placed below where it has recently been (under the 1.4980 area) or you risk having any long positions stopped even if it heads upwards.
SHORT: Stop losses around 1.2530 or 1.2555 depending on your risk profile. Both these points are above recent swing highs that may offer some protection.
