Forex Adjustments: EUR/CAD & AUD/JPY Short

Decided to lock in profit on my EUR/CAD short, as well as a quick adjustment on my AUD/JPY short to maximize my potential forex gain.

Short EUR/CAD

Original Trade Idea: Forex Trade Idea: EUR/CAD Double Top

EUR/CAD 4-Hour Forex Chart

EUR/CAD 4-Hour Forex Chart

Decided to go ahead and close my EUR/CAD short down with a profit today.  After a massive run lower since mid-February, I feel like this downtrend may be out of legs, especially as the minor area of interest last seen in December held as support.  Also, we’ve got Canadian trade balance, Ivey PMI, and labor productivity coming up tomorrow, with the former two events forecasted to come in weaker-than-expected.

With the probability of the pair moving higher to my adjusted stop at 1.4775, I just went ahead and closed out the position at 1.4687. 

Total: +238 pips/ +0.24% gain on +0.50% risk

Overall, I’m okay with closing here because I did hop into the downtrend a little late in the move, so the potential risk-to-reward declined and likelihood of a reversal grew.  If the pair does pop higher, I will look to re-short this pair because I am still biased to the short side on the euro ahead of next week’s ECB monetary policy meeting.

Short AUD/JPY

Original Trade Idea: Forex Trade Idea: AUD/JPY Short

AUD/JPY 4-Hour Forex Chart

AUD/JPY 4-Hour Forex Chart

After entering with a small position at the 200 SMA and Fibonacci retracement area, the pair continued on higher thanks to a mix of positive Australian data and broad global risk sentiment in favor of risk taking lately.  Now the market is testing a declining trendline, connecting the falling tops since mid-December.

So, there is a possibility that we could see sellers jump in at this point to play the downtrend at a better price, and I think I’ll continue to be one of them by adding a bit to my short.  But with Australian retail sales and the U.S monthly job reports coming up, I’m going to add only a quarter position risk to my half position risk entered at 82.00. 

Short quarter position AUD/JPY at market (83.54), max stop at 85.25, profit target at 76.00

This takes my total max risk up to 0.75% (still below my usual risk of 1.00%), and I do have room to add another quarter position if I feel it makes sense, depending on what happens in the next few sessions.  My max potential gain increases from 0.92% at 76.00 to 2.02% at 76.00, increasing my potential R:R from 1.84 to 2.70, so the trade still looks good to me from that perspective.

It’s wait-and-see mode for now, so stay tuned by following me on Twitter and Facebook for updates and adjustments!