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AUD/CAD continues to move in my favor, and with a basket of Aussie and Canadian data points coming soon, I think it’s time to take a small profit.

Trade Adjustment: AUD/CAD Resistance Held on Retest

AUD/CAD 4-Hour Forex Chart
AUD/CAD 4-Hour Forex Chart

So far so good for my AUD/CAD short, which I shorted back in the middle of January as a retest of falling ‘highs’ and a broken major support area drew sellers back in. Since my last update two weeks ago, Aussie price action has leaned lower on weakening Chinese data and Asia region export data, while the Loonie thrived against the majors on optimism that the U.S. and China will avoid a major trade war.

The pair has moved well over one weekly ATR from entry (+180 pips) but found support and consolidated around the .9400 area that had me rethinking on whether or not I should add to this position. For now, I’m holding off on that, especially since we’ll get a slew of economic data from both Australia and Canada to close out the week that may change the bias.

I think Australia’s latest manufacturing PMI read may spark some volatility, but the bigger potential catalyst may be the monthly read on Canadian GDP, coming Friday at 1:30 pm GMT. With recent Canadian data coming out weaker this month (e.g., Ivey PMI, manufacturing sales, retail sales), I decided to lock in a profit now by closing a third of my position at market (.9326) and rolling my stop down to .9500. 

This locks in a roughly 0.13% gain on 0.50% risk, and creates a near “risk-free” trade as my new stop is slightly below my short entry price.

If the data continues to favor a downside move, I will look to add back to the trade that third taken off, and maybe even more depending on the data and the reaction. So stay tuned for that update and as always, good luck and good trading!

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