With fresh market speculation, upcoming catalysts for the Japanese yen, & a changing price action picture, I decided to close down my CAD/JPY short manually to limit my max risk.
Original Trade Idea: Forex Trade Idea: CAD/JPY Rising Wedge
Since entering at market after a resistance breakdown, CAD/JPY has popped back to the upside, likely on the recent speculation that Japanese Prime Minister Shinzo Abe intends to put off raising the consumption tax. The decision is likely to go down as early as this Wednesday, and if he does postpone the tax hike from the scheduled April 2017 timeframe to a couple of years down the road, it’s likely that the recent pressure on the yen was only the beginning of what could be short-to-medium term selling in the yen.
I think the odds are more likely in favor postponement, and based on recent price action (buyers at new rising trendline supports uptrend still intact), it looks like forex traders are starting to price it in. With that said, I’ve decided to close my CAD/JPY short at market (85.00) for a very small loss:
Total: -185 pips/-0.32% loss
In hindsight, I don’t regret my decision to hop short at market since it looked like the resistance at 85.00 and strong break lower was a signal of a new move lower. And in the forex market, the story and sentiment does often change quickly, so the recent development in yen pairs isn’t much of a surprise.
Overall, I think I could have traded the pair any differently by hopping in when 85.00 held as resistance three times. And my other regret is that I couldn’t hold on to this trade much longer because I think we’re about to see a string of weak Canadian data. Of course, that hasn’t happened yet, so I’ll wait and see and do another reflection at the end of the week.
What do you think? Does the adjustment make sense to you or would you have held on into the Japanese Sales Tax announcement this week? Would love to hear your opinion, so please leave a comment down below!
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