Forex Trade Idea: 2015-01-07
With oil weakness & European weakness still driving forex price action, I’m checking out a simple Fib setup on CAD/JPY to play the current market drivers.
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So, were currently seeing the pair trending lower on the one hour time frame, with a small bounce higher in today’s session. I’m not sure how much higher it can bounce, but if it gets up to the 101.50 – 102.00 area, it’ll be running into several technical arguments for potential resistance: Fibonacci retracement, major psychological handle, and moving averages. That’s where I look to play a very small short position, and I wanna keep it small because of the upcoming Canadian jobs data release this Friday. I’m setting a pretty conservative stop of half the weekly ATR and my target is the December 2014 lows. Here’s what I am doing:
Short quarter position CAD/JPY at 101.80, stop at 102.80, profit target at 99.20
I’m only risking 0.25% of my account on this one because it’s so short-term, and with this trade structure, I have a potential reward-to-risk ratio of about 1.6:1. Depending on the market environment ahead of the jobs data, I may close down or adjust my stop to lock in profits ahead of the big risk event.