The support area finally broke on GBP/CAD, bringing another swift move lower. Profit came quickly so I decided to close and take it to the bank ahead of the weekend.
Original Trade Idea: Forex Trade Idea: GBP/CAD Support Break?
After the support area break, the pair made two attempts to get back above 1.8500 but the bears weren’t having it. The likely cause for another push lower was this morning’s weak U.K. manufacturing production data, falling much larger than expected, -1.1% vs. 0.2% forecast. Combine that with the bullish move in oil prices over the last three days, and it shouldn’t be a surprise that GBP/CAD drew in Loonie buyers to maintain that 1.8500 downside break with British pound bears over the last couple of sessions.
Not only did support break, but we saw a swift 200 pip move lower to 1.8300 before the bears ran out of steam, which is a much faster move than I expected. Over the years I’ve learned that moves like this are gifts from the market gods and should be locked in right away (especially ahead of the weekend), so I decided to close my trade down manually (1.8349) just ahead of the Friday close.
Total: +156 pips/ +0.21% on 0.50% risk
I still like GBP/CAD short for now because of the strong trend and fundamental arguments for the downtrend, so I’ll restructure a trade plan this weekend to account for the new price levels and chart picture. But until then, it’s a good feeling to go into the weekend with locked in profits and that I have more capital to work with going into fresh ideas.
That’s it for now…Thanks for checking out my blog and have a great weekend!