Earlier this month, I told you guys about how I wanted to short the dollar because of (a) expected Fed rate cuts, (b) increased U.S.-China trade tensions, and the (c) neat downtrend opportunity on the daily.
Unfortunately for my trade, these themes have dialed down or have reversed in the past couple of days.
China, for example, has promised to buy U.S. goods and exempted a couple of U.S. products from its tariffs as a sign of goodwill, which the POTUS responded to with a half month delay of another set of tariffs on Chinese products.
Meanwhile, the Fed is still expected to cut its rates but the move looks already priced in. Until Powell signals fresh rate cuts in the next few months, it doesn’t look like dollar bears will get support from the theme.
Last but not the least is USD/CHF’s downtrend, which got broken when the pair made fresh September highs yesterday. After finding support at .9800, USD/CHF popped high enough to bust through the 100 SMA and test the 200 SMA.
Since I was watching the charts closely, I was able to close as soon as USD/CHF registered these new highs.
Closed my USD/CHF trade ahead of the FOMC meeting! Will let you know the deets in a bit 🙂 #forex
— HuckleKiwi Pip (@LoonieAdventure) September 17, 2019
Here are the deets:
-53 pips (-0.25% loss on 0.50% original risk)One thing I could’ve done better was to watch related headlines more closely. I didn’t get the “get out now” vibes when the U.S. and China made trade concessions (I got used to flip flopping headlines about this), but I should’ve prepared to exit when the ECB announced additional stimulus. I forgot just how inversely correlated EUR/USD and USD/CHF are!
I ended up waiting for a technical break before I pulled the trigger. Next time, I’ll consider exiting positions early and re-entering when fundamental factors line up with technicals again.
How about you? Have you tried getting out of a trade early with the intention of entering again at a better price or market environment?
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