Forex Adjustments: EUR/JPY & GBP/CAD

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.

Short EUR/JPY

Original Forex Trade Idea: Looking at Major Resistance on EUR/JPY

EUR/JPY 1 Hour Forex Chart

EUR/JPY 1 Hour Forex Chart

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.

Short GBP/CAD

Original Forex Trade Idea: Bearish Divergence on GBP/CAD?

GBP/CAD 4 Hour Forex Chart

GBP/CAD 4 Hour Forex Chart

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.

  1. Added a half position at 1.7700
  2. Total position stop moved from 1.7990 to 1.7790
  3. 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!

  • ForExchange

    Hi Cyclopip,

    very nice decisions. You cut your loss in the first trade and go for the maximum win in the second trade. Well we know the news turned out bad for the trade but we can not influence it, only be prepaired for everything. Interesting is if your SL was triggerred or not as the price went up to 1.7788 so I think it depends on the broker and spreads.

    I wish furthermore great analysis and have a nice day,

    FE

    • Cyclopip

      Thanks for your thoughts ForExchange! As far as my GBP/CAD trade, in hindsight it looks like I picked the perfect reversal point to go lower! I still think I made the right decision at the time because of the contrasting rhetoric between the minutes and the inflation report, but that’s just the way goes sometimes. As always, thanks for you thoughts and for checking out my blog!