What This Bearish Engulfing Pattern Is Telling Us
Short In NZD/CAD Kicks Into Gear
A week or so ago we profiled a short ‘position’ trade that we were ‘stalking’
in NZD/CAD – we showed a few charts on NZD/CAD as well as USD/CAD as a
way to highlight my thoughts and also tossed in some fundamental analysis that
further made the case for lower levels.
On August 17th we (myself and my clients) initiated a short in NZD/CAD at
.8420 with a stop loss at .8575. Almost immediately the trade went against
us pretty hard – trading up above .8500 as the USD/CAD rallied hard.Â
The turning point came last last week when the USD/CAD failed at resistance and
formed a bearish engulfing candle – see chart below
We now have USD/CAD well below the 1.2010 level and has also cleared 1.1930
but might now be poised to consolidate a bit before moving lower. Based on
this, we feel that we are in a solid position for further gains on NZD/CAD.Â
We did close 1/2 of the trade this morning at .8352 (nearly a 70 pip gain) and
expect to see the remainder of the position play out well in the days and weeks
ahead.
As always, feel free to send me your comments and questions.
Dave Floyd is a professional FX and stock
trader based in Bend, OR and the President of Aspen Trading Group. Dave’s
approach to FX combines technical and fundamental analysis that results in
trades that fall into the swing trading time frame of several hours to several
days.