The Winnipeg lines just keep on giving.  The CAD/JPY just keeps on trucking down to the extensions.

The USD/CAD played ball quite well.  This was my favorite trade we’ve taken so far.  Just worked out brilliantly.

To see the original idea, click here.

Good morning, boys and girls!  Happy to have you along for the ride today.  We talked yesterday about the fact that the CAD/JPY was, far too soon, already back at the bottom of the channel.  And that it’s a possibility that we could sell it if it closed below the bottom of the channel.  Which it did.  Which did create a sell trade.  Which is profitable right now.

The red lines on the outside of the channel are my Winnipeg Lines, and are simply fib extensions of the outside of the channel (23%, 38%, 62%).  These are the profit targets on the breakouts.

Somebody call Jonnie Cochran!  I think this channel’s being harrassed!  Too many touches on the bottom!

The pair just finished giving us a nice channel-bottom-bounce trade and now it’s already returned to the bottom.  While I think this channel has a very nice bottom, it’s just too much for me to have touched it twice so soon.  I’d prefer that the pair had risen up to the top of the channel first, before I would be willing to buy at the bottom all over again.

So, what do I do?  I wait.  In fact, I wait to see if we can rise back up and go to the top of the channel, or I actually start thinking about selling the pair on a close below the bottom of the channel.

Here’s an alternate view of the USD/CAD.  We looked at a S/R trade on the pair yesterday and here’s another way of looking at the same type of trade.

Trading with channels is one of my favorite things, along with VW buses, great pizza, and the HMS Somerset.  In this case, the CAD/JPY didn’t disappoint us.  The pair hit the bottom of the channel and then popped up to hit the first fibble, which is always the first choice as profit target.

What I like about buying at the bottom of a rising channel is that our profit target (the fibble) is moving away from us (letting our profits run), and our stop loss (below the bottom of the channel) is getting closer as time goes on (meaning we are cutting our losses fast at any time).

Anyway, here is the chart: