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Last, week I put up short orders to play a short-term fundamental bias on GBP/CAD. I’m still short biased on the pair, but I’ll be adjust my entry strategy in case current resistance holds.

Range Play on GBP/CAD?

GBP/CAD 4-Hour Forex Chart
GBP/CAD 4-Hour Forex Chart

As mentioned above, I put up short orders on GBP/CAD at 1.7300 to play the idea that the top of the range would hold and bearish catalysts would could through.

Well as expected, we did see the Bank of England increase their stimulus measures and Canada did produce somewhat positive updates on employment, which did lead to some weakness ahead of the weekend.

Which brings us into this new week, where we saw the pair rally, despite last week’s bearish updates for the pair, and despite this week’s big lean toward positive global risk sentiment thanks to very positive COVID-19 vaccine news.

There doesn’t seem to be a direct catalyst for GBP/CAD’s bullish behavior (especially given oil’s strength on the vaccine news), so with the pair nearly testing the top of the range, I am remaining bearish biased.

But with the price action indicating the rally may run out of steam before my orders may be reached, I’ve decided to scale into a short position to avoid the risk of missing out on the trade if resistance holds and the pair reverses back to the downside.

I’ll be shorting at market with a nibbler position to start, and then near the very top of the resistance area to give me an average price near my previous 1.7300 target entry area. Here’s what I’m doing:

Short half position on GBP/CAD at market (1.7267), max stop at 1.7460 with 0.50% risk, max target at 1.6970

Short half position on GBP/CAD at 1.7340, max stop at 1.7460 with 0.50% risk, max target at 1.6970

I’m only risking 1.00% of my account and if both positions are triggered, I’ve got a  short with an average price of 1.7308, with solid potential return-on-risk of over 2.22:1 to start.

If my second short never triggers then that means I’ve almost got a guarantee of a little bit of a win, which is a fine trade-off to avoid potentially the market never making it up to 1.7300.

And of course, if the story changes for either currency, I’ll be sure to cut the trade/orders away quickly and move on to the next one.

Be sure to manage your risk and avoid overexposure.

What do you guys think? Did I make the right move by adjusting my entry? If not, what’s your entry strategy and risk tolerance? 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.