I’ve made a few adjustments in my open trades to account for additional volatility and upcoming catalysts. Before reading on, make sure you review my initial ideas on GBP/USD and USD/CAD first.
Crude oil made a quick rebound yesterday despite the increase in U.S. stockpiles, leading USD/CAD to slide back below the 1.3100 support area and hit my adjusted stop loss at 1.3075.
I ended up with a breakeven trade on this one, as I went long at 1.3025 and 1.3125 for an average entry price of 1.3075. In retrospect, I probably should’ve just closed my trade early when the pair seemed unable to break past the mid-channel area of interest near the 1.3150 minor psychological level.
I’m still keeping my bullish bias on USD/CAD, though, since I think crude oil prices have room to fall further on weaker fundamentals. However, I’d rather wait for the results of the July NFP report to be printed to gauge if dollar strength is likely to persist or not. For now, nothing gained and nothing lost on this one!
As for my short Cable position which has been open for nearly a month already, I’ve decided to trail my stop lower to the 1.3375 level as price seems to be breaking above the symmetrical triangle resistance.
Stochastic is indicating overbought conditions and is turning lower, possibly indicating a return in selling pressure. We’ve got the BOE rate decision coming up in a few hours so volatility could pick up and finally push this pair in a clearer direction. In case price surges sharply to stop me out, I stand to lose just 0.34% on this trade instead of the initial 0.5% that I’ve risked.
Market participants seem to be ready for a 0.25% interest rate cut so anything disappointing or less dovish than expected might still spur a pound rally. The BOE Inflation Report is also up for release and this might contain significant downgrades to growth and inflation estimates, possibly enough to keep a lid on GBP/USD gains.
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.