Traders!

Just a quick update on the AUDCAD currency pair. Back on January 10th we discussed a trade to sell the pair as it was showing bearish signs on the hourly time frame. The trade continued lower and we booked a very small profit only for it to then reverse and move higher. The trade didn’t work out as we anticipated. It has since broken the top at 1.0660, and has again showed some bearish signs with yesterday’s daily candle closing below the previous day’s low.

While we’re looking at other currency pairs for other opportunities, we wanted to make sure to update you on this one and inform you that another short possibility is looming. Please see the chart below:

AUD/CAD 4 Hour Chart

We have to keep an eye on economic data on the Canadian front as GDP will be released later today and unemployment figures will be released on Friday.

We’re seeing momentum begin to wane and there signs that price is beginning to diverge from the AO indicator. Price has continued to move higher as the AO has consolidated on the daily and started to move lower on the 4 hour.

The bigger news, however, may be the intervention levels for the Bank of Japan and the Swiss National Bank. Everyone is talking about a possible intervention and we’ll send out some charts in a bit to explain how to take advantage of such an event. Stay tuned.

Traders:

Welcome back from vacation! The market is picking up steam and liquidity is back to normal, therefore, we’re back in action. We did have some profitable trades that we managed to find during the break but nothing to brag about. The trade opportunity we’ve been discussing all day is on the AUD/CAD currency pair and we think the risk/reward is amazing!

Take a look the daily chart below:

AUD/CAD Daily Chart

At this time, this is definitely a contrarian trade opportunity as the trend favors the aussie. There are several factors to consider here:

1. THE PRICE OF OIL IN THE NEAR TERM WILL REMAIN HIGH DUE TO THE UNCERTAINTIES SURROUNDING A POSSIBLE CONFLICT WITH IRAN – this is a positive for the Canadian economy as it is the United States’ largest oil supplier and the fifth-largest energy producing country in the world.
2. THE CURRENT CHART RESEMBLES A POTENTIAL HEAD AND SHOULDERS FORMATION WITH THE TOP PEAKING AT 1.0660 AND CURRENT PRESSURE ON THE 1.0520 SHOULDER, WHICH HAS ENCOUNTERED OFFERS SINCE LATE SPRING/EARLY SUMMER.
3. THE FAILURE TO STAY ABOVE THE 1.0500 LEVEL DURING LATE OCTOBER AND EARLY NOVEMBER WAS A WARNING SIGN AND A POTENTIAL SELL OFF TO 1.0160 IS MORE THAN LIKELY.

Furthermore, we look at the hourly chart to see the current rejection of 1.0500 taking place. The hourly candle is very bearish and there are other indicators pointing for continuation to the downside. If this opportunity plays out as we expect it to, the pay off will likely be 8.5x the potential loss, given the stop is placed just above yesterday’s high of 1.0525.

AUD/CAD 1 Hour Chart

There are other ways to manage this trade opportunity as markets are dynamic and we must be able to adapt to new information. We’ll look forward to updating you as this plays out.

With the current year about to end, we’d like to take this opportunity to wish everyone the best of everything for the year to come.

“The New Year is a moment of quiet reflection. Reflect on the year gone by; of the happy gains and missed opportunities. Recount the good and bad of the past year. Introspect on our personal growth, and learn from these experiences. The New Year is the time to ensure that we bring balance to our life with positive influences overriding the negative ones.” – Simran Khurana

For the New Year, we wish you joy, fulfillment, prosperity, and excellent health. May all your wishes be realized.

Our New Years resolution is to remain focused on providing our members with premier analysis, trading ideas, and managed accounts services. We are excited about the opportunities that 2012 will bring both our team and our members.

Happy 2012 everyone!

Traders:

Most of you wouldn’t have received this trade on time as it was published a minute before rumors moved the market and triggered our order.

Reports relating to the IMF providing an additional sum of $500-600 billion USD sent the pair slightly above 1.0300, triggering our order at 1.0305 just by a tick. As this report was unfounded, the technical breach of 1.0300 didn’t last long. We had to quickly adapt and we cut our position in half to minimize risk and loss. As price stabilized just under 1.0300, we waited for employment figures to be released using the rest of our open position.

AUD/USD 1 Minute Chart

Employment figures were worse than expected and the pair continued to drop to 1.0230 in the next ten minutes. Our stop was moved to 1.0280, which was the last of our AUD/USD long trade. It’s still possible that the pair may break above that level if tested again, so we may apply a similar strategy next time.

Now we look for the next opportunity.

Traders:

It’s been about a week since we last updated. This is due to the intervention that occurred on November 30th when swap lines were extended to the European banks. Governments are attempting to avoid a repeat of the 2008 financial crisis.

Well, with only several weeks of good trading left before we go away for the New Year holidays we see an opportunity for a break out on the AUD/USD currency pair. The 1.0300 level has proved as important resistance; we are now looking for a break higher. Our first target will be shallow as there are lots of offers between the 1.0370 and 1.0420 levels.

As we adapt to the market on new information, the following levels may change:

Target 1 – 1.0365 [if hit, move stop to entry level]

Target 2 ~ 1.0400 [at which point we'll stand aside and look for new information]

Stop – 1.0270 MODIFIED [we may move it higher if price fails above within first few attempts]

We are planning on offering managed accounts in the next few weeks, stay tuned for more information. Some members have requested this addition as schedules often make it difficult for traders around the world to match up with opportunities.