So far so good on my AUD/JPY long trade! With another top-tier catalyst coming up, I thought I’d roll my stop higher to reduce my exposure.
Speaking of an upbeat AUD bias, though, lemme squeeze in this quick trade update on my earlier AUD/CAD position.
Short AUD/CAD Trade
I shorted this pair on a descending triangle breakdown on a longer-term time frame then held on to my bearish bias as the downtrend channel remained intact.
However, the tide started turning against the Loonie after Canada printed a downbeat jobs report, leading traders to price in downbeat expectations for the BOC decision the following week.
I decided to close my short position early as the channel support continued to hold and markets adjusted to the less dovish RBA announcement. I still managed to catch 50 pips on this play even though it eventually turned against me. Phew!
But because I only risked 0.25% on my breakdown entry and didn’t catch the pullback I was waiting for, the gains were also meager.
P/L: +50 pips / +0.03%
Still, a win is a win! Now onto my current long AUD/JPY play…
Long AUD/JPY Trade
The long-term ascending channel support is holding like a boss and the pair appears to be gaining traction on its climb. After all, fundamentals support more Aussie gains as the RBA sounded a bit more hawkish in their latest policy statement.
To top it off, risk-taking has also been in play and supportive of the higher-yielding Aussie. In contrast, the yen is on weaker footing as traders are watching global bond yields closely and appear to prefer the U.S. dollar in case a risk-off environment returns.
In my earlier update, I highlighted a double bottom pattern on the pair’s 4-hour time frame, and it looks like price has already breached the neckline. With that, I’ve decided to roll my stop up from the original 83.75 level to just below the double bottom.
I’m not leaving it all up to chance since the BOJ statement is comin’ up soon and there has been talk of a “reversal rate” by Kuroda. As it turned out, he was referring to that point in which aggressive stimulus is starting to do more harm than good, leading market watchers to speculate that the Japanese central bank might also be thinking about unwinding their QQE program.With that, yen traders could pay extra close attention to any potential changes in wording during the actual announcement and presser. Indications that the BOJ is also shifting to a less dovish stance might lead to a sharp yen rally that could take me out of my position, so I thought it prudent to limit my exposure.
This adjustment should trim my potential losses down to 0.38% in case the pair makes a sudden sharp drop. Of course I’ll be watching the BOJ decision closely myself to gauge if I should just hop out at market or keep my position open. Stay tuned!
See also: Q3 2017 Trading Performance Review
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