And just like that, after a strong breakout lower after the RBA rate decision, AUD/CAD spikes back up to trigger my adjusted stop and close my remaining short position. Here’s a quick review and thoughts on AUD/CAD going forward.
Downtrend Bounce in AUD/CAD?
After the drop in Aussie pairs after the RBA set expectations for probably more rate cuts ahead, I rolled down my stop on my AUD/CAD position from 0.9070 to 0.8980 to lock in a 0.62% gain on 1.00% original risk. And to my surprise in just a couple of days after the Aussie drop, AUD/CAD rallies big time (a two full daily ATR move) to triggered my adjust stop and close my remaining position at 0.8980.
Total: +92 pips avg. / +0.62% gain on 1.00% max risk
This move was due to a big drop in oil prices over the last few days (WTI crude down as much as almost -6% on the week), likely on the growing economic gloom after a lot of disappointing news from global PMI data. This put pressure on the Loonie (oil is Canada’s largest export), sending it lower against the rest of the major currencies. It’s also likely that the Aussie caught a bid this week on positive comments from U.S. President Trump on the U.S.-China trade story and on broad global risk-on sentiment as expectations of a rate cut sparked moves into risk assets today.
These are scenarios I wasn’t expecting when I rolled my stop, especially comment from Trump, which is always top level risk each and every day. Had I thought about it more at the time, it’s likely I would have just taken the entire trade for a near 1:1 R:R. Overall, I’m happy with the trade and looking forward on AUD/CAD, if the 0.9000 holds as resistance, this actually may be another shorting opportunity for AUD/CAD bears. But with the Canadian Ivey PMI tomorrow and employment update next week, I’m going to hold off for now from shorting again, at least until I see what the Ivey PMI will give me.
Stay tuned that update and let me know what you think of this trade. Should I have taken profits earlier this week or was rolling down and riding the trend the right move in your mind. Would love to hear your thoughts below in the comments section!
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