Phew! Glad I got out of that one real quick! I decided to exit my CAD/JPY short position early when price seemed to be finding support at that new descending channel. In case you’re wondering what I’m talking about, don’t forget to review my initial trade idea first.
Short CAD/JPY Trade
I hopped in a short trade on what I seemed to be a break below a double top neckline on the pair’s 4-hour chart, but it turned out that price was actually starting to form a descending channel formation. CAD/JPY zoomed right back up after bouncing off the 85.00 handle and came close to my stop, which happened to be just a hairline away from the channel resistance.
Because of that, I decided to make some adjustments on my position and rolled my stop loss down to the latest bounce off the channel in order to trim potential losses. I reminded myself to watch price action closely once another test of the channel support happens.
The pair stalled upon reaching the 85.00 area, signaling that bears booked some profits right there and that buyers could be waiting to jump in. Canada’s jobs report is up for release and early indicators are hinting at a potential upside surprise so I thought it best to just exit and wait for a better price in case I want to short again.
Fortunately, I was able to get out of this position before Donald Trump stole the show and started talking about his “phenomenal” plans for tax reform. This drove U.S. stocks and the dollar significantly higher, causing the Japanese yen to give up its recent gains in return. Apart from that, the meeting between Japanese Prime Minister Abe and the U.S. President has sent yen bulls scurrying on speculations of currency manipulation discussions.
I guess you can say I got a bit lucky with this one as I still managed to bag a few measly pips on the short position even though my entry wasn’t ideal. I’m also thanking my lucky socks that my gut told me to just lock in whatever gains I had because I felt that something “bigly” was about to go down. Here’s how it turned out:
P/L: +40 pips / +0.04%
I’ve still got a slight short bias on this pair just because it’s still moving inside that descending channel and I’m thinking that the sharp increase in U.S. oil production could keep a lid on crude oil prices. Also, NAFTA renegotiations and the proposed U.S. border tax on Canadian imports could mean a double-whammy on their energy sector and trade activity. Besides, the BOJ shared a brighter economic outlook in their recent statement and the yen could be the safe-haven of choice in case signs of trouble in the U.S. pop up.
But for now, I’m sitting on my hands and waiting for another test of the channel resistance to gauge if the downtrend might resume. Did you guys trade this pair? Don’t forget to check out our risk disclosure if you’re trading this one, too!
See also: Q4 2016 Trading Performance Review
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.