So much for that falling trend line! Dollar strength prevailed and took USD/CAD past the resistance zone I was watching, so I just decided to jump ship.
Short USD/CAD Idea
I thought I caught the perfect opportunity to hop in this pair’s downtrend when price pulled up to the area of interest right at the falling trend line and Fib levels. I even thought that I snagged a much better entry point than initially planned, but it turns out a breakout was underway.
Because of that, I just decided to cut my losses now that the tech setup was invalidated. My actual stop is more than a hundred pips away from where I exited, so I think I was able to avoid a larger dent on my account with this decision.
In retrospect, I probably should’ve closed a tad earlier when BOC Governor Poloz sided with policymaker Lane in being cautious about future hikes. Although the head honcho admitted that the Canadian economy is improving and refrained from jawboning the currency, his speech was considered less hawkish than expected, dampening rate hike hopes for October and December.
I should’ve also reconsidered my dollar bearish bias when tax reform came back in the limelight late last week. Risk aversion also seemed to be popping its head back in the markets on the usual slew of North Korean threats and geopolitical risks from Germany and Spain.
Around that time, I had my eye on a short-term rising channel on the pair’s 1-hour time frame and planned on closing if support continued to hold. And that’s exactly what happened when the U.S. manufacturing PMI reports printed stronger than expected results, convincing me to exit the trade and look for another one instead.
Here’s what I ended up with:
P/L: -90 pips / -0.19%
While I’m disappointed that I still wasn’t able to benefit from the USD/CAD long-term selloff at all, I’m gonna chalk this one up as a good risk management decision. I tried to play my fundamental biases with a neat tech play then decided to act swiftly when the story changed. At least I live to trade another day!
See also: Q2 2017 Trading Performance Review
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