Trade of the Year #2: Short USD/CAD

• USD sentiment has now turned definitively bearish;
• CAD sentiment and short positioning has been at quite extreme levels;
• Some of the crosses such as GBP/CAD are exhibiting extremely overbought technical signals;
• Recent interbank reports suggest that the real money brigade have exited their CAD shorts, leaving the Speccys holding the overflowing saucepan!

It’s positioning which will ultimately drive this market and if the speculators start buying back their CAD shorts in a turning market then we will see some big moves.

I’m short in USD/CAD from last week with a stop now above 1.1050 (it is a medium term trade). I’m looking for an initial dip now towards 1.0750 and possibly a short consolidation phase between 1.0750/1.0950 before the big sell-off really begins.

(My track record on the CAD isn’t exactly brilliant so keep that in mind 🙁 )