Closed out my short-term short position in GBP/CAD as the fundamental picture changed quickly for this pair.
Descending Channel on GBP/CAD
Sentiment has changed quickly for both the British pound and the Canadian dollar from just a week or two ago where traders were pricing in a potential rate cut from the Bank of England, and traders were feeling positive on the Loonie given its relative performance in 2019 and expectations of no rate cuts.
But this week, that all changed with the better-than-expected U.K. employment update reducing speculation of a rate cut, while the Bank of Canada’s latest monetary policy statement was a bit more dovish on the economic outlook than expected. I was watching GBP/CAD during the BOC statement release today, and after seeing the pop higher way beyond the channel pattern, I decided to close the trade manually at market (1.7197) to limit my loss:
Total: -140 pips average / -0.68% on 1.00% max risk
Overall, it was a good setup that was actually profitable with a 52.7% return-on-risk as it traded around 1.6950 after the second position was triggered, but I didn’t think of closing as I was pretty confident on the BOC meeting being positive for the Loonie as economists were expecting hawkish comments at the meeting and the latest Canadian jobs report was pretty positive (Canada added 35,000 jobs in December, capping strong 2019 for employment). But as always the markets had a nice surprise and I had to cut the trade, which definitely happens sometimes no matter how good your setup is or what analysts say.
That’s it for my GBP/CAD short trade, but I will keep watching it. What do you guys think? Are you bullish on GBP/CAD now or is this just a minor pullback . Let me know in the comments section below!
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