Trade Closed: EUR/GBP Resistance Retest?
Back in February, I was hoping to jump on the positive vibes that a potential Brexit extension was bringing to Sterling, but I did so wanting to get in on a little bounce higher on EUR/GBP. That bounce did come and my short order was triggered at 0.8615, but since then the market couldn’t resume the trend lower as sentiment shifted on Brexit with negotiations between the U.K. and the European Union going no where last week.
This week, the British pound caught a bid early on Monday, taking EUR/GBP down to the previous support area around 0.8550, where I decided to close down half of my position manually (0.8551) to reduce my risk in front of a heavy week of Brexit catalysts. And this morning when the pound was jumping around during the Brexit debate, I closed my remaining position manually (0.8585) to avoid any Brexit risk for now.
Total: +47 pips average/ +0.11% on 0.50% risk
So, sentiment shifted on this trade, basically invalidating it from a fundamental standpoint as Brexit uncertainty grew. I was glad to exit it with at least a small gain, which a 22% return-on-risk is not bad for holding onto a trade for a couple of weeks.
No more Sterling trades for me for now, but I won’t hesitate to jump on an opportunity if one does arise during this Brexit process.
Trade Adjustment: AUD/NZD Resistance Retest?
In my last update, I closed down half of my position manually (1.0379) and roll the stop on my remaining position to break even, effectively creating a “risk-free” trade with 0.14% profit locked in on 0.50% risk taken.
I also said that I’d look for an opportunity to add back to the trade if it broke 1.0370. Well, it certainly did break without a hiccup, and now AUD/NZD looks like it’s ready to test the 1.1300 handle. I think I’m now ready to add back to the position, but I’m doing so if there is another pullback higher, which could be the case with top tier events coming from both Australia and New Zealand in the new few weeks. Most notably, we’ll get the Australian quarterly employment update on Mar. 22 and the latest monetary policy decision from the Reserve Bank of New Zealand on Mar. 28, both of which should spark great moves for AUD/NZD.
With that in mind, I’m going to roll down my stop further from 1.0475 to 1.0380 to lock in another 0.14% gain. I’m adding a short order for 1.0380 with 0.10% risk and the same 1.0380 stop. So, if triggered and stopped out, I come out with a 0.18% gain on 0.50% risk, but if triggered and my target at 1.0150 is hit, my potential return-on-risk went from just under 2:1 to around 3.4:1, a 1.70% gain on 0.50% risk. Not too bad.
So that’s it for now as I’ll be waiting for the big Aussie and Kiwi events later in the month. Stay tuned for that update and as always, good luck and good trading!
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