Decided to close my EUR/CAD long position for a small gain after strong resistance held off the bulls and as the risk environment remained strongly positive. Was it the right move? Here’s a quick review.
EUR/CAD Triangle Break & Retest?
Two weeks ago, I decided to go long EUR/CAD if it pulled back to a broken resistance-turned-support area to play my fundamental bias in favor of the euro over the Loonie.
I thought the Loonie was relatively weaker than the euro on possible oil weakness and no likely hawkish rhetoric from the BOC, and that the euro would continue to benefit from the Euro area re-opening from COVID-19 lockdowns.
Well, I did get the pullback and it did turn out to be another great buying opportunity as my buy order at 1.5410 was pretty much the bullish reversal point.
The pair rallied once again, but started to see resistance around the 1.5550 area; likely due to worries about a potential no deal for the the EU recovery fund, a string of better-than-expected updates from Canada, and a persistent positive risk environment.
With both technical and fundamental barriers in my way, I decided to manually close the trade (1.5493) last Thursday and look for another buying opportunity if the pair dropped again.
Total: +83 pips / +0.18% gain on 0.50% max risk
Unfortunately, that looks like the wrong move at the moment as broad risk sentiment strongly flipped negative last Thursday, and when combined with another round of positive business sentiment from the Euro area on Friday, EUR/CAD took off like a rocket after I closed. Doh!
So, while my adjustment made sense and I was able to lock in a profit, I missed out on a lot more pips as the pair hit highs around 1.5770 during today’s session.
Was it the wrong move? It seems like it but I don’t think I was wrong for thinking the positive risk environment would continue. The markets have ignored the bad underlying economic data to focus on the reopening for weeks/months now, so why would it change then?
Well, sometimes it just happens like that and the markets will do what they do. Just gotta adapt and trade what the market gives you, right?
Looking forward, I’m still bullish on this pair for now and will potentially jump in long once again if I can get a decent pullback this week. Stay tuned!
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