No luck on getting that pullback I needed to enter NZD/CAD long and I’ve got a fresh idea on GBP/USD for a short-term forex play.
Original Trade Idea: Forex Trade Idea: NZD/CAD Long Breakout
Once again, my bias was on point with direction, but my risk adverse nature had me out of another solid directional move. On the four hour chart above, we can see NZD/CAD finding no resistance at the 100% Fibonacci extension point, which is likely influenced by the ongoing crash in the oil markets (oil exports are a large part of Canada’s economy).
With the pair already breaking above the .9400 handle and likely to hit .9500 soon, my trade idea has been invalidated so I will close my open orders to buy NZD/CAD at .9100 and .8900. No trade.
For potentially my last trade idea of 2015, I’m going back to a pair I’ve done well with all year: GBP/USD. While I don’t expect big volatility this week because of the upcoming end of year holidays, I think there will be movement in Cable with economic events coming from both the U.K. and the U.S. The most notable is likely to be the U.S. durable goods data on Wednesday, but the U.K. has current account and final quarterly GDP data that should cause a stir. And hopefully a jump in volatility will take the pair up to an area that I think will draw in the few forex traders that are still trading.
On the one hour chart above, we’ve got a simple trend-pullback setup. If the market does bounce higher, it’s likely to run into the major, major psychological area of 1.5000, which also happens to be the 38% Fib retracement area and an area of previous support. I look to short there with a very small position given the low liquidity environment (big risk for out sized moves and slippage), with a decent sized stop of half the weekly ATR, and a 2:1 max profit target. Here’s what I’m doing:
Short quarter position at 1.5000, max stop at 1.5125, max profit target at 1.4750
I’m only risking 0.25% of my account on this one, and with this trade structure, I have a potential reward-to-risk ratio of about 2:1. Of course, anything can happen in the forex markets, so if the story changes I’ll be sure to reassess and adjust quickly if necessary. Stay tuned by following me on Twitter and Facebook!