I LOVE IT, USDCAD SMASHES S3
It's on the way to 1.1259, 50% fo larger move from 06/01/09 lows to 07/08/09 highs, and it happened on what I thought would be a quiet evening. Asia take the reins and whips the USD right out of the gates, though it may be due to  Thin Market conditions between the US session and Asia Session.
A Few Thoughts At The End Of The Day
The DJIA managed to make a daily close back above the head and shoulders neckline formed over the last several weeks. This often happens before the real run in price takes place. I still think that we will see 7800 and 7250.
The USDCAD does not look like it is going to make a daily close below the S3 like it did yesterday, and I see a pull back to the 1.1400/10 area tonight or tomorrow.
Making a push higher, USDJPY finally cracked the target from Monday's call for 93.42 to be hit. I'll hang onto this position for more gain to the 94.80/85 area.
I am a little disappointed with the Double Top seen on the attempts higher for the EURJPY though. With price unable to close above the 38.2 Retracement line of the07/01 high - 07/08 low at 130.78, keeps the focus on the downside for me.
USDCAD pierces 38.2 Fibo Line
The move from 1.0782 to 1.1723 produced a 38.2 Fibo line at 1.1364/69, which was broken this morning and current price action is still hovering above this line. The daily S3 is at1.1328 and will most likely remain untouched today. With this turn around, a fib projection using the high from the week of03/13/09 and the low from the week of 06/05/09, then placing the pivot price at last weeks high, puts the 76.4 projection line at .9981 (almost the bottom of a weekly black candle unfilled from 06/06/08). The 100% projection more closely matches an unfilled daily black candle from 11/16/07. I haven't made up my mind yet, but I may be looking for a play towards parity in the future. A closer more reasonable target for me, is the 38.2 projection at 1.0852, just above the low from 06/01,06/02 and 06/03.
DJIA Slumping
I thought that with all the hub-bub in the news this morning about Goldman Sachs, it was supposed to save the world. Appears it ain't so. Great earnings numbers and the TARP dollars are repaid, I think the fear here is that the banks that have been able to repay the TARP funds are going to be ok, but those that haven't may still be in a bit of trouble. Another idea I just had was that investors had already priced in a much bigger gain and were a little disappointed. I like that one, because we are after all optimists.
USDCAD Clears Target From Last Thursday**
I received a comment from a reader yesterday questioning my attention to the Oil/USDCAD correlation, and why I would base trades on that correlation. Just to clarify my stance, I never rely on correlations to make trades. Having gone back and read the entire blog, and navigating back to the article from last Thursdayy, when I first posted this trade set up, I concluded my stand was entirely right. Even though oil slid, I expected the USDCAD to slide also, as evidenced by last Thursday's post that clearly showed this set up with a target at the lower red line. This bump and run reversal is fairly high probability trade and one I like to watch. Yesterday's comments were merely comments on the current non-correlation. Searching Google I found over 500 articles reaching back to 2005 talking about the Oil/USDCAD correlation, so yes I feel good about yesterday's posts.
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