Thanks to last week’s Non-Farm payrolls data, the Greenback took a big hit, taking down my USD/CAD with it to my stop level. Now closed out, it’s time to do a quick forex review.
Original Trade Idea: Forex Trade Idea: USD/CAD Uptrend
Last week’s U.S. Non-Farm payroll event was a Greenback killer as the market priced in a scenario where the FOMC does not raise interest rates in October. With the labor force participation and wage growth rates not looking bright, really, it’s hard to think that FOMC will even raise by the end of 2015! Well, that’s a debate for another post, but for now, it means that the Greenback went into sell mode–including against the Canadian dollar–and likely to stay under pressure in the short-term.
On my four hour chart above, we can see that it was a near straight down move for the pair, easily breaking the previous support area around 1.3050, which was highlighted in my original trade idea. This week, there’s was barely a slow down and eventually my stop was hit at 1.2975 to close me out for a full loss.
1st half: -325 pips
2nd half: -225 pips
Total: -275 pips avg./ -1.00% loss
In hindsight, I obviously could have closed out the trade manually to limit my max loss even further, especially after the NFP data came out badly. Or I could have closed out the trade before the NFP to avoid event risk, but with the data looking good in the past few months, to me the odds were better-than-average that the data would continue in that trend.
Overall, the original setup still looks like I’d take anytime without hesitation, but I could have managed it better to limit my max loss. Lesson learned and hopefully I can do a better job the next time a similar situation comes around.