The trend is your friend…until it isn’t anymore! That’s what happened with EUR/CAD with the pair breaking above my technical arguments to stop me out. Here’s my review.
Original Trade Idea: Swing Short on EUR/CAD
It looks like sentiment is shifting for euro pairs and comdolls, now moving to the upside as the euro bounces from its long selloff (in anticipation of this month’s ECB meeting) and commodity dollars taking a hitting on a couple of factors (weak Chinese inflation, a surging US Dollar and declining demand hurting commodity prices). The in conditions were enough to reverse sentiment and break the strong downward momentum in EUR/CAD. In the process, both of my short orders place around the Fib/moving averages area, as well as my tight stop loss level at 1.4275 to close me out.
1st Half: -125 pips
2nd: Half: -25 pips
Total: -75 pips average/ -1.00%
One thing I can definitely take away from this trade was that I didn’t account for the continued rise in volatility when setting my stops. The weekly ATR went from about 180 pips on average during the summer, to about 230 pips over the last couple of week. I think had I accounted for that, I’d still be in this trade, which still looks to be a valid short in the mid-to-longer term timeframe. I probably could have also cut out a bit earlier to save some pips, but for a while, it looked like the moving averages and Fibs would hold and reverse the market.
No luck on that trade, but I’ll continue to watch EUR/CAD for now to see how much pullback I’m going to get, or to see if this is a legitimate turn in sentiment. Until then, stay tuned by following me on Twitter and Facebook!