With the weekend quickly approaching, I decided to shut down all of my open forex positions and orders to lock in profits and avoid event risk. Here’s a quick review.
Original Trade Idea: GBP/USD Short Idea
The first FOMC meeting of 2015 provided the USD boost I was looking for with the Fed downplaying the drop in inflation, even saying it may rise gradually over the medium term. Of course, FX traders took this and the upbeat outlook on the U.S. economy as a sign we will still see a rate hike in 2015 by buying more Greenbacks on the news.
Fortunately for me, I was able to get into my GBP/USD trade and the 1.5200 area held nicely as resistance once again. I got a move all the way down to the psychologically significant 1.5000, we it held as support once again today. I think it’s an area where forex traders would take profits ahead of the weekend, and deciding to do the same, I closed manually at 1.5061 to lock in profits and avoid weekend event risk.
Total: +139 pips/ +0.36% gain
It’s a small gain because it was a nibbler type trade, but I’ll definitely look to get back into another GBP/USD next week as I’m still bullish on the Greenback because of monetary policy divergences. Stay tuned for that!
Original Trade Idea: Long-Term Support on AUD/JPY
No chart on this one as there was nothing to show. With forex traders going big time bearish on the comdolls this past week after the surprise BOC rate cut, dovish comments from the RBNZ, and expectations of a rate cut from the RBA (either at next week’s meeting or sometime in 2015), I decided to close out my orders to buy AUD/JPY at 90.00 for now (No trade).
It doesn’t make sense to have a long position or long orders at this time when we may see a dovish act or rhetoric by the Reserve Bank of Australia next week, so I thought closing was the prudent thing to do. I’ll continue to watch this level and see how it reacts if tested once we get past the RBA meeting early in the Tuesday morning Asia session.