I’m pressing my advantage on this one, fellas! CAD/JPY keeps heading north so I’ve added to my long position on a pullback earlier this week. If you’re wondering what I’m talking about, make sure you read my initial trade idea first.
In my latest update, I shared my plans to take another long position with 0.25% risk on a short-term pullback. After all, CAD/JPY seems to be trading safely above an ascending trend line and has bounced off the 50% Fib yesterday. I was able to get in at 85.15 with an initial stop below the 61.8% retracement level (84.25).
It didn’t take long before Loonie bulls and yen bears got back in the game, pushing the pair to break past the swing high around the 86.00 major psychological resistance. I took this as a sign to roll my stop up even higher to protect my profits.
Yen weakness looks ready to extend its stay for yet another week while the Loonie is still enjoying its post-OPEC gains. The cartel’s decision to limit production could be enough to support crude oil prices in the next few months, yielding higher revenues for Canada’s energy sector and possibly leading to a more optimistic BOC statement this week.
Last Friday, jobs data from Canada beat expectations as the economy added 10.7K positions instead of shedding 16.5K workers. The unemployment rate also improved from 7.0% to 6.8% but this was mostly due to lower labor force participation. In Japan, the consumer confidence index ticked down from 42.3 to 40.9 while average cash earnings posted a meager 0.1% uptick versus the projected 0.2% rise.
Canada’s trade balance is also up for release this week and BOC officials have previously warned of weaker export activity. Japan has its current account balance, final Q3 GDP reading, and bank lending figures due on Thursday’s Asian trading session so I’ll be on the lookout for signs to book my profits and run. With my trade adjustments, I put 0.25% on the line for each position but I’ve locked in 150 pips (+0.10%) on my first one and trimmed my risk to 0.07% on the second.
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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