A little bit of surprise from today’s BOE meeting minutes that had forex traders lighten up on Sterling shorts. GBP/CAD popped higher on the news to eventually hit my trailing stop.
Original Forex Trade Idea: Bearish Divergence on GBP/CAD?
The Bank of England meeting minutes contrasted the Nov. 12 Inflation Report where Governor Mark Carney cited lower growth forecasts, instead pointing out that inflationary pressure may build. The less dovishness of the minutes was immediately bullish for the British pound, and in the case of my GBP/CAD, the pair pushed higher and triggered my trailing stop set yesterday to close my full position at 1.7790.
1st full position: +300 pips
2nd half position: -90 pips
Total: +245 pips/ +0.72% gain
So, a less dovish Bank of England meeting was one of the worse case scenarios that I had in mind beforehand and so I end up with a smaller gain. And I’m okay with that as it may mean less traders will be selling Sterling in the short-term, and we’ve got U.K. retail sales tomorrow, which the market expects to come in above the previous reads.
Overall, it was a good trade that took a while to play out, and for this pair in particular, I’d still look to short on another retest of the 1.7900 to 1.8000 area.
With this trade closing, that leaves me only with my EUR/CHF long position, which seems to be holding support at the 1.2000 area–the level that Swiss National Bank is supposedly defending. I’ll most likely be holding on to this one for a while as well, at least up until the November 30 gold referendum vote in Switzerland. Besides that, I’m still waiting for pullbacks in yen pairs and EUR/GBP is hitting a potentially strong resistance area on the daily charts that I just may take after the U.K. retail sales data. Stay tuned!