Forex Trade Idea: 2014-09-17
Took a swing on on my forex watchlist pair after today’s FOMC meeting. Greenback buyers took control against the Loonie at interesting technical levels.
Before you move on, for those who are not familiar with my framework, signals, setups, or acronyms, please visit my discretionary trading framework blog.
I mentioned earlier in the week that USD/CAD presented a nice technical setup in favor of the Greenback. And it was a way to play the FOMC monetary policy decision that was just released a couple of hours ago, in which the cut assets purchases by another $10B, no change to interest rates, and kept the “considerable time” language in reference to when we may see the next rate hike. The reaction was bullish for the Greenback, and specifically, USD/CAD held the area I’d been watching out for support (1.0950 – 1.1000).
With the bulls holding in that area, I thought it made sense to take a swing on this setup, going long at market. I set up my stop pretty wide (over one weekly ATR), but if the market breaks back below the rising trendline, I’ll most likely close the trade early. And my max target will be the previous swing high, although I may make adjustments to my plan to hold on long and lock in pips if I reach that point and the environment continues to be very bullish for the pair. Here’s what I am doing:
Long full position USD/CAD at market (1.1005), max stop at 1.0835, max profit target at 1.1200
I’m only risking 1.00% of my account on this one, and with this trade structure, I have a potential reward-to-risk ratio of about 1.17:1. But given the freshness of the FOMC event, I may close early for a small profit if sentiment shifts in favor of the Dollar bears.