Forex Adjustment: 2014-11-13
It’s been three weeks and I finally got myself a nice drop on GBP/CAD, enough to possibly break the strong support around 1.7900. Don’t know what’s coming next so it’s time to lock in profits and maximize gains.
Original Trade Idea: Bearish Divergence on GBP/CAD?
Up until this week’s bearish inflation report from the Bank of England, it was sideways choppy action for GBP/CAD. Fortunately for my position, 1.8200 did hold strongly as a resistance area, but 1.7900 was being very stubborn from the buy side. With the potential for a rate hike in the U.K. pushed further into 2015, there were enough sellers to finally break that stubborn 1.79000 and hold it’s position below the break.
Given the bearish view on U.K. rate hikes, I think the pressure is still on for a move lower, but with more big time U.K. events coming up (MPC meeting minutes and retail sales next week) and potentially bearish Canadian data next Friday (wholesale sales and CPI), I’d like to be prudent by locking in profits on my current gains. Here’s what I am doing:
Trail stop from 1.8440 to 1.7990 to lock in 100 pips profit
Now I can sit back and let this trade do its thing, but for the most part, I think I may get one more boost to the downside on U.K. data next week before I’ll have to probably close or lock in further profits. Canadian data hasn’t been good, so there is a chance we can see more of the same next week and a bearish Loonie reaction. But if Canadian data isn’t so bad and the reaction in the Loonie isn’t too bearish, then I’ll look to add another short to the position as I think the British pound will be the bigger driver of the pair between the two currencies. Let’s see what happens…stay tuned!