Forex Trade Review: 2014-07-30
Since my stop adjustment last week, the Loonie went into broad sell mode. This brought EUR/CAD into an area on the chart that invalidated the trade and closed me out. Here’s my review.
Original Trade Idea: Buying Loonie on a Pullback
In the last couple of weeks, we saw a slight turn into the positive for European data (e.g., better services & manufacturing PMI data) and weaker core retail sales from Canada as the most likely driver for EUR/CAD rising higher. And it was enough in the last few trading sessions to push the pair up to a situation where I consider the trade technically invalidated (above the Fibs and moving averages) and where my trailed stop at breakeven (1.4580) was triggered.
Total: 0 pips/ +0.00%
In the past, this would have been psychologically tough ending for a trade that was up nearly 260 pips at one point, but before the trade even began, I was mentally committed to playing the position for the long-term as the trend suggested. I’m not feeling beat up on this one, so it looks like I’m letting go of situations like this and keeping my head clearer for future trades.
In hindsight, I probably should have recognized the strong shift to bearishness on the Loonie and trailed my stop a bit tighter to just above that consolidation area after the bullish spike in EUR/CAD last week. But at the time, the chart was technically valid for a short position and that’s why I stayed in.
Overall, breakeven is better than a loss and it’s a good thing I’m taken out now since it looks like broad risk sentiment is shifting toward the negative. I’ll continue to watch this pair for opportunities, especially at the 1.4650 handle (previous swing high/strong resistance). And one adjustment for the future is to adjust or exit out of trades the first week of each month as I’m starting to notice a pattern of consolidation/reversals in the market during this data heavy time of the month.
That’s it for now as I’m sitting on the sidelines to see what the FOMC says later today at 7:00 pm GMT. Stay tuned!