Here’s a quick update/adjustments as I’m taking action on my GBP/JPY idea from yesterday, and as AUD/CAD continues to move in my favor.
Fib Short on AUD/CAD
In my last update on my AUD/CAD short position, I closed down two thirds of my position at 0.9229 and rolled down my exit points ahead of what was likely a positive employment update from Australia. Well, the report disappointed from the angle that the unemployment rate did not tick lower despite the net increase in employment (more people sought work), which added to speculation the RBA will need to cut to stimulate the economy. The Australian dollar fell on the news, and since then, we’ve gotten higher oil prices and positive Canadian sentiment to help send AUD/CAD lower.
With the market now trading just above my max target, and with Canadian retails fast approach (and expected to be weaker-than-previous), I’ve decided to roll down the stop on my remaining position to 0.9220 to lock in further profit. I’ve also decided to remove my max profit target at 0.9100 in case we get more positive Canadian data and/or strong oil prices to keep the market in a strong downtrend.
With this adjustment, I’ve locked in a 1.03:1 return-on-risk (or +0.52% on 0.50% risk) while opening up my max potential profit. So there’s nothing to do now but see where the market takes me with the upcoming Canadian data, and I’ll look to reassess and adjust after that.
Downtrend Bounce in GBP/JPY
Yesterday, I posted up GBP/JPY onto my watchlist ahead of monetary policy statements from both the Bank of Japan and the Bank of England. A lot of what I was looking for in my watchlist post did play out as GBP/JPY did continue to bounce higher into the Asian and European session, and we got dovish rhetoric from both the BOJ and BOE. And while the BOE didn’t open up to the possibility of cutting rates (instead keeping rate hikes on the table IF a no-deal Brexit is avoided), they did lower growth forecasts, which seemed to be enough for traders to take short Sterling positions. That was enough for me as well.
I decided to hop in short as 137.00 held as resistance and reversed the market lower during the morning U.S. session, but since I missed the very top of the bounce, I wanted to go with a scale in strategy for my entry to cover me in different scenarios since I missed the most optimal entry point. Here’s what I’m doing:
Shorted at market (136.54) with a half position (0.50%) max risk, max stop at 138.20, max target at 135.00
Short order at 137.00 with a half position (0.50%) max risk, max stop at 138.20, max target at 135.00
If both positions are triggered, I’ll have a max risk of 1.00% of my account with a potential max gain of about 1.30:1. Of course, it’s likely I’d exit as soon as the falling ‘highs’/Fibs is broken, and I extend my profit target if the argument for the downtrend strengthens.
That’s it for now but I’m wondering what do you guys think? Did I make the right moves or adjustments? Let me know in the comments section below!
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