Trade Review: GBP/CAD Fib Short & USD/JPY Short

Closed out my GBP/CAD short position after fresh U.K. unemployment data and my USD/JPY short after recent hawkish Fed rhetoric on the rate hike outlook.

Short GBP/CAD

Original Trade Idea: Forex Trade Idea: GBP/CAD Fib Short

GBP/CAD 4-Hour Forex Chart

GBP/CAD 4-Hour Forex Chart

Bullish move for Sterling in the morning London session after better-than-expected U.K. unemployment data was released. The drop in unemployment claims and slight tick higher in wages was enough to have pound bulls load up and the bears drop their short positions across all forex pairs. This included GBP/CAD, which was also likely helped higher with a pullback in oil today, behavior that tends to put pressure on the commodity-linked Canadian dollar.

The move was strong enough to break that area of previous interest/resistance and Fibonacci retracement levels, invalidating my trade idea and closing me out at my stop orders at 1.8825 for a very small loss: 

Total: -252 pips/-0.50% loss

In hindsight, there really isn’t anything that I’d do differently to my trade plan or management other than probably close out the pair right away after the better-than-expected U.K. unemployment data. But the pair didn’t really break above resistance until the U.S. session, so based on price action at the moment, I think I made the right decision in the moment with the given information at hand.

Overall, it was a solid setup both on fundamentals and and technicals, but it just didn’t work out this time. Losses happen and I’m glad I stuck with very small risk this time.

Short USD/JPY

Original Trade Idea: News Trade Idea: USD/JPY Fibs Ahead of NFP

USD/JPY 4-Hour Forex Chart

USD/JPY 4-Hour Forex Chart

Since entering this position last week at 109.00, risk sentiment has shifted on the Greenback as forex traders price in yesterday’s positive U.S. CPI data and recent bullish rhetoric from the Fed that a June rate hike may be “live.” I believe this is the reason that USD/JPY is staying bid, even with broad risk sentiment tilting towards risk-off (usually favoring the yen over other majors).

Today, we’ve got the Fed meeting minutes coming, and with USD sentiment on the rise and the potential for the meeting to further spark June rate hike speculation, I decided to limit this trade to a very, very small loss by closing my half position manually at 109.55

Total: -55 pips/-0.15% loss

This is another trade that looks good technically, but recent news shifted the fundamental landscape a bit to change my bias on this pair.  Had no choice to close, especially ahead of the Fed minutes which may confirm to forex traders that a rate hike by the FOMC is still a possibility in June, which could be a big deal for the broad financial markets.  Based on that information, I’m good with this decision, and I definitely can hop back into this short position if the story makes sense after we see the Fed’s meeting minutes.