EUR/JPY broke a key technical level to the upside and GBP/CAD continues its downtrend lower, both of which had me making forex adjustments early in the week. Here’s a quick update.
Original Forex Trade Idea: Looking at Major Resistance on EUR/JPY
I actually thought about it over the weekend and decided that holding a short position in a very uncertain time for Japan had low probability of success, and decided to close at the open of the new trading week. Unfortunately, my decision to close down early was made easier by news that Japan was once again back in recession. This caused the pair to pop higher to break 2013 highs (the major resistance I based my trade on) on the notion that conditions are bad enough to warrant more easy money from the BOJ. I decided to close at market (146.49) to save myself from losing any more.
Total: -149 pips/ -0.75% loss
So, the major resistance didn’t hold and I probably could have save a few percentage points of loss if I had waited a little bit to close my trade down. But overall, I think closing was the right decision as it looks like 145.00 is now the support area to watch on this pair. I’m not too fond of going long euros yet, so I’ll definitely look to short yen against other currencies if we finally get to see a pull back on this extended yen sell off.
Original Forex Trade Idea: Bearish Divergence on GBP/CAD?
Fortunately for my forex account, my GBP/CAD short position is kicking butt for me and after my stop adjustment last week, it’s now a risk-free trade. But with a few potential short-term game changers for both the pound and the Loonie on the forex calendar coming up, I decided to make a couple of adjustments.
- Added a half position at 1.7700
- Total position stop moved from 1.7990 to 1.7790
- Removed my 1.7500 target.
If the catalysts this week push the pair higher, then I get taken out of my trade with the first full position gain of 300 pips and a second half position loss of 90 pips for a net 0.70% profit. If the economic data pushes the pair lower, I’ve increased my position to increase my potential gain, and removed my target incase the move is strong enough to go beyond 1.7500.
Worst case, this trade makes up for most of that small loss in EUR/JPY and best case, well it’s an even bigger profit potential because of my bigger position. Of course, if the market does get to 1.7500, I’ll re-assess market conditions and determine whether I should keep the dream alive or take profits on this trade. Until then, stay tuned!