So much for that bullish pennant I was looking at! GBP/CAD made more volatile forex moves after top-tier reports were released but I’ve still got a long bias on this one. I’m looking at a potential retracement play but I’m planning on scaling in.
I already entered a small position (0.25%) risk at market when price tested the near-term support at the 2.0200 major psychological level after the U.K. printed a weaker-than-expected retail sales figure. I’ve still got a second long order at 2.0000 in case the pair makes a larger retracement to the rising trend line on the 4-hour forex chart, then I placed my stop below the trend line and Fibs.
I haven’t figured out my ultimate profit target just yet, but I’m planning on trailing my stop once the pair tests the recent highs near the 2.0400 major psychological resistance. I’m thinking that this uptrend could go on for the long run since the BOE and the BOC have diverging monetary policy biases.
As Forex Gump mentioned in his Central Bank Roundup, the BOC recently cut interest rates and could be ready for more easing moves if the commodity price slump worsens. In contrast, the BOE seems to have shifted to a more hawkish stance when Carney noted in the recent Inflation Report hearings that they’re moving closer to hiking rates. There’s not much in the way of top-tier data from both the U.K. and Canada this week so I’ll sit tight for the U.K. preliminary GDP release next week.
What do you guys think of my forex trade idea?
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