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Global risk sentiment is taking over the markets big time today, and it’s not a good thing for my EUR/CAD idea when traders get ultra negative. Closed out my short position for a small profit to avoid the selloff in risk assets… Here’s a quick review.

EUR/CAD Fibonacci Resistance?

EUR/CAD 4-Hour Forex Chart
EUR/CAD 4-Hour Forex Chart

It’s only been a week since I put up this idea to short EUR/CAD at Fibs after a strong more higher and to play my fundamental bias in favor of the Loonie over the euro. And it’s been a choppy ride as the pair dropped, and then popped 100 pips multiple times in that short time.  But while the technical and fundamental stories still play in favor of the Loonie over the euro, I think I had to let this trade go as global risk sentiment shifted big time towards the negative.

We just got more weak Chinese economic updates, and fresh recession signals in the form of  yield curve inversions, all of which means traders will stay in risk-off mode for more than a hot minute. This would not only likely mean that the euro would out perform the Loonie in the near to medium term, but also oil demand which would also likely dragged the Loonie lower.

So, with the thought in mind that global risk sentiment trumps everything right now and that it’s getting more negative, I decided to close down my EUR/CAD short at market (1.4876) during the morning U.S. session.

Total: +29 pips average / 0.14% gain on 1.00% max risk

Looking back, I probably should have closed the trade for a profit after it dropped to 1.4800 and just couldn’t break. Everything was still good from a fundie perspective, but that strong support should have been my signal to take some profit, especially with how fickle the market has been given the fast dynamics of geopolitical risk (i.e., Presidential tweets). Overall, it’s good to take a profit, but I definitely could have taken more off of the table (around 0.70% on 1.00% risk when it tested 1.4750).

What do you guys think? Did I make the right call to not cut earlier? Let me know in the comments section below!

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.