So far so good on my CAD/JPY trade, but it looks like doubts about an OPEC output deal are starting to creep in. Think I should keep this open or close early? In case you missed it, don’t forget to review my initial long-term trade setup first!
I hopped in a long position on a break of the descending channel at 83.25 with my stop below the 80.00 major psychological level. Price continued to climb from there but found resistance at the 84.00 handle last week before turning lower on Monday as the odds of an OPEC output deal fell.
Apparently, Iran is still refusing to cut production down to the OPEC-recommended levels since it’s trying to make up for lost revenues from the time when Western sanctions were in place. Meanwhile, Iraq says that it will be on board only when everyone agrees to cooperate. With that, there’s a chance that the cartel could fail to produce a deal this week, which could spur sharp losses for the commodity and the oil-related Loonie.
Then again, Saudi Arabia could be intent on maintaining the cartel’s credibility, especially since their oil minister has been optimistic about reaching an agreement soon. Similar to their September meeting in Algiers, they could announce that they reached a deal… to draft a deal. Again.
Another possible outcome is that they could concede to Iran’s demands and give them special treatment just to ensure that an agreement is made and to prevent further declines in crude oil prices. This could keep CAD/JPY afloat since the Japanese yen looks ready to extend its slide for yet another week.
I’ve rolled my stop up to the 82.75 mark, just below the 83.00 major psychological support, to limit potential losses in case OPEC talks break down. This should leave me with 0.04% on the line since I initially risked only 0.25% on this position, giving me room to add another 0.25% in case price makes a sharp break past the 84.25 area.
As always, don’t risk more than 1% of your account on a single trade and make sure you read our risk disclosure if you’re thinking of taking the same setups.
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