Before I kick off some fresh ideas for the new week, it’s time to clean up my current ideas by closing my EUR/JPY long position & orders on GBP/AUD.
GBP/AUD Downtrend Pullback
Tough luck on this idea. Got the direction right and entry strategy of waiting for a pullback right, but I was just a little bit too conservative because of the pending monetary policy statements from the Reserve Bank of Australia and the Bank of England.
The RBA’s warning of what a strong Aussie could do to inflation and growth likely contributed to the Australian dollar’s weakness, but it wasn’t enough to get the pair to 1.6800 before the Bank of England’s statement and concerns on Brexit and growth sent Sterling lower.
With that move clearly missed, it wasn’t too long where I decided that the odds of my trade triggering and another selling move occuring were too low to logically keep on. So I decided to close my short order at 1.6800. No trade.
At this point, I’m no longer bearish on the pair either longer or shorter term, but if the market does get back to 1.6800, I’ll re-assess to see if a new trade makes sense.
EUR/JPY Long Closed
Since my last update, the pair was able to get one more boost higher for the bulls, likely on the recent positive eurozone inflation reads to fuel further speculation that the European Central Bank will tighten monetary policy sooner rather than later.
After breaking the strong resistance around 130.50 (and triggering another position long at 130.80 along the way), 131.00 was breached but the party for the bulls didn’t last long. The market sold off just ahead of the weekend, marked by lower highs and lower lows into the close.
With the new week in gear, it looks like the bears are still in control without any notable catalysts pushing the pair lower. With that kind of situation, and my longer-term bias that the Japanese yen is very oversold (based on COT data), I decided to close this trade out manually (130.63) as I don’t see a situation to push the pair higher in the short-term:
1st position: +163 pips
2nd position: -17 pips
Total: +129 pips avg. /+0.38% gain on 0.50% risk
Overall, the only thing I think I could have done differently was to add and roll up my stop more when the pair fell to around 130.20. But with the lower highs and extreme Japanese yen sentiment, I think I made the right call on just cutting. Only time will tell, and until then, I am scoping out fresh ideas on the Kiwi dollar ahead of what could be a good week for New Zealand dollar traders.
Stay tuned and as always, good luck and good trading!
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