I had my doubts about an OPEC deal but I decided to stick to my guns in keeping this long CAD/JPY position open. Now it’s time for me to lock in some gains and consider pressing my advantage.
Before the actual OPEC huddle, I made some adjustments to this long position by rolling my stop just below the short-term rising trend line I was seeing. At that time, it was still below my entry at 83.25 but I wanted to trim my potential losses in case the cartel failed to reach an agreement.
Instead, the member nations decided to surprise the markets (a recurring theme this 2016?) by announcing a production cut to 32.5 million barrels per day. This will take effect in January next year and go on for at least six months, likely keeping crude oil and the positively-correlated Canadian dollar supported throughout that period.
With that, I’ve decided to roll my stop higher to 83.75, still below the rising trend line but 50 pips above my entry price. I know I mentioned that I considered adding on a break of the 84.00 handle, but I was wary of additional volatility so I refrained from leaving buy stop orders while I was away from my trade platform.
I’m still hoping for a chance to add to my position, though, as I’ve only risked 0.25% of my account so far. I’m eyeing a possible retracement to the trend line around the Fibs or 84.25-84.50 area for a pullback entry. With my adjusted stop loss, I’ve got 50 pips or 0.04% in the bag even if this pair makes a sharp drop. My profit target is still at the longer-term area of interest near 88.00.
As always, don’t risk more than 1% of your account on a single trade and make sure you read our risk disclosure if you’re thinking of taking the same setups.
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