AUD and CAD got hammered as the Doha meeting on oil restrictions failed and caused substantial concerns over the oil cartel OPEC’s ability to restrict and control the oil production. This caused the oil futures to open significantly (3.86%) lower today while it also caused the commodity currencies to gap overnight. According to Reuters tensions between Saudi Arabia and Iran were blamed for the failure, which revived industry fears that major government-controlled producers will increase their battle for market share by offering ever-steeper discounts.
Among others the USDCAD pair jumped above my sell area. I wrote two last week that USDCAD is oversold and therefore vulnerable to contra trend moves. I mentioned that Crude oil was also looking weak and I thought it might incite a rally in the inversely correlated USDCAD. This is indeed what indeed happened: market rallied higher and provided us a great sell signal that led to a nice move lower and a profitable trade. My T1 was hit on Thursday providing our traders with up to 100 pips depending on the strategy applied. Those that closed the whole position at T1 or followed the risk management rules laid out in my Position Management webinar weren’t hurt by the weekend gap. This gap is yet another reminder that it’s the risk management that is the single most important feature in our business plan.
Chief Market Analyst
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About Janne Muta, HotForex’s Chief Market Analyst
Janne Muta is a seasoned industry professional with over 16 years experience in the global markets. Originally from Finland, Janne has worked for institutions in both Helsinki and London as an institutional fund manager, global market analyst and FX educator.
Traders and fund managers from around the world have benefited greatly from Janne’s technical analysis methods. The indicators and price action based trading models he has developed, have, after rigorous testing, proven to be invaluable in identifying high probability trades.
“My mission is to help you to become a confident and successful trader”
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