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Forex Trade Idea: 2015-01-07

With oil weakness & European weakness still driving forex price action, I’m checking out a simple Fib setup on CAD/JPY to play the current market drivers.

Before you move on, for those who are not familiar with my framework, signals, setups, or acronyms, please visit my discretionary trading framework blog.

CAD/JPY 1 Hour Forex Chart
CAD/JPY 1 Hour Forex Chart

So, were currently seeing the pair trending lower on the one hour time frame, with a small bounce higher in today’s session.  I’m not sure how much higher it can bounce, but if it gets up to the 101.50 – 102.00 area, it’ll be running into several technical arguments for potential resistance: Fibonacci retracement, major psychological handle, and moving averages.  That’s where I look to play a very small short position, and I wanna keep it small because of the upcoming Canadian jobs data release this Friday.  I’m setting a pretty conservative stop of half the weekly ATR and my target is the December 2014 lows.  Here’s what I am doing:

Short quarter position CAD/JPY at 101.80, stop at 102.80, profit target at 99.20

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t follow what I do. Risk Disclosure.

I’m only risking 0.25% of my account on this one because it’s so short-term, and with this trade structure, I have a potential reward-to-risk ratio of about 1.6:1.  Depending on the market environment ahead of the jobs data, I may close down or adjust my stop to lock in profits ahead of the big risk event.

Of course, anything can happen in the forex markets, so if the story changes I’ll be sure to reassess and adjust quickly if necessary. Stay tuned by following me on Twitter and Facebook!

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.