Thanks to the BOE decision, pound bears took over and caused GBP/CHF to drop like a rock. Meanwhile, NZD/CAD seems to be setting its sights lower as well. If you’re not sure what I’m talking about, make sure you read my initial trade ideas first!
I thought I already missed the chance to short at the very top of the longer-term range around the .9550 minor psychological level so I just waited for a chance to catch the bearish momentum on a break of the trend line on the 4-hour time frame. As it turned out, I could’ve waited for a pullback to this broken short-term support, which was near the range resistance anyway.
Fortunately I’ve got a very wide stop past .9700 on this one, giving my short position enough room to breathe. I’ve decided to keep this trade open now that crude oil prices seem to be recovering and market participants are back to buzzing about a possible RBNZ interest rate cut for next week. Of course I’ll be keeping close tabs on the Canadian jobs release later today to see if I should be exiting early on a significantly downbeat release.
As for my GBP/CHF short position, well, I chickened out on adding on a higher pullback just moments before the actual BOE announcement. At that time, I worried that the U.K. central bank might disappoint pound bears who are looking for a large bump up in stimulus.
However, it looks like the dovish MPC members didn’t hold back in ramping up their easing efforts, even announcing additional bond purchases on top of their 0.25% rate cut. BOE officials also shared that there’s scope for further easing in their next meetings, pushing pound pairs sharply lower before I could even add to my GBP/CHF position.
Now that price has moved below my entry at 1.2870, I’ve decided to trail my stop lower for a risk-free position. The Swiss economy has yet to print its latest foreign currency reserves report, which might spur a franc selloff if it shows any evidence of SNB intervention.
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 following my trade decisions!