In the July 13th email on $/cad affirmed the short position (sold on July 9th at 1.1625).
The market has continued to tumble since, today taking out support at the bullish trendline since Nov 2007 (currently at 1.0925/50), on way toward the June 1st low at 1.0790 and possibly below. Though there are no signs of even a short term bottom, the market is clearly oversold after its 2 week, 900 tick tumble and with risk rising for a good sized bounce at virtually any time. In order to maintain a good risk/reward in the short position, want to get very aggressive with stops and would now take profit on a close above the bearish trendline since mid July (currently at 1.1010/25 and falling rapidly). Given the steepness of the decline, there is a very good chance that we will take profits on the position before the final low, especially if the market goes through a “bottoming phase”. However, we are trying to maximize profits, not catch exact tops/bottoms, and don’t want to risk a sharp snapback and having to cover at significantly higher prices if that does occur.
Longer term, see the market as completing (or nearly) a large irregular type correction at the June low at 1.0790 (A-B-C, see weekly chart/2nd below). Though this suggests an extended period (months) of upward ranging all the back toward the way back to the Nov/Dec/Match triple top at 1.3000 and eventually above, there is still no confirmation that a bottom of that magnitude is in place. This in turn leaves open scope for a temporary break below the 1.0790 low as part of a longer term bottoming. Note too that longer term support is below there at 1.0575/00 (62% retracement from the Nov 2007 low at .9060). Switched the longer term bias to the long side on July 17th at 1.1165 but will need to see signs of a more important bottoming soon, if/when the 1.0790 low get taken out.
