After hitting new lows and taking profit at the end of February, AUD/CAD clawed its way back higher, triggering my adjusted stop to close out my trade.
Trade Closed: AUD/CAD Short at Resistance
At the beginning of the year, I decided to short AUD/CAD to play the falling trendline pattern and my fundamental bias that Canada is doing better than Australia. And it worked out pretty well as the pair moved from around .9500 to .9320, where I took some profit and rolled down my stop to .9500 to lock in a “risk-free” trade.
Since then, it’s been a rough couple of weeks for my AUD/CAD short, and the culprit looks likes broad weakness in the Canadian dollar off of weaker-than-expected economic data from Canada and the Bank of Canada sounding a bit more dovish lately. The Aussie dollar likely found some buyers off of improving global risk sentiment with geopolitical fears (e.g., U.S.-China trade war, no-deal Brexit) waning in the past week or two.
Today, the pair was able to break above the strong resistance area around .9475 with the help of the latest Australian jobs update (lowest unemployment rate in eight years), quickly triggering my adjusted stop at .9500 to close out my full position:
Total: +64 pips average / +0.14% gain on 0.50% risk
Overall, not a bad trade, but I definitely should have taken more than a third off the table when I first took profit, and closed the pair manually or shifted my stop lower after the Bank of Canada sounded more dovish and Aussie sentiment started turning higher.
Going forward, I think I’m going to up my max risk as well to around 1% while maintaining my stop sizes (between one daily ATR to one weekly ATR) as volatility seems to be drying up. What do you think? Is there anything else I could have done better on this trade? Let me know in the comments section below!
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