Looks like I caught the wrong side on this one so I’ve cut my losses quickly with this CAD/JPY setup. Think I should hop in the opposite position? Before reading on, make sure you review my initial trade idea.
Prior to the BOJ decision, I wasn’t sure which direction to take on this CAD/JPY descending triangle pattern. When the central bank announced its plans to target the yield curve instead of aiming for 2% inflation, the yen initially sold off as traders anticipated that this would require prolonged easing efforts.
I went long at market when the 77.00 support level seemed to be holding. I was able to get in at 77.70 and I set my stop close to the 75.00 mark.
However, the selloff soon fizzled when it became apparent that BOJ policymakers were all bark and no bite. Soon after, CAD/JPY started breaking below the triangle support and I decided I would need to cut my losses quick. I waited for a pullback to the broken triangle bottom and was able to exit at 76.55.
The Loonie probably wasn’t the best currency to buy against the yen also, as the OPEC doesn’t seem to be getting any closer to reaching an output freeze deal. Besides, data from Canada came in weaker than expected last Friday and BOC Governor Poloz just recently admitted that it may take years for the economy to recover from the oil slump.
Anyway, here’s what I ended up with:
P/L: -115 pips / -0.07%
In retrospect, I probably should’ve been more patient in waiting for the post-BOJ dust to settle before hopping in. At that time, though, I feared that I might miss a big move back up to the triangle resistance so hurried to go long. On a more positive note, I’m gonna give myself a pat on the back for putting only 0.25% on the line and for being able to exit early before the selloff continued.
As always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.