With a new month and long weekend ahead, and after some fresh data to shift my biases, I decided to close out my two open positions for a small net profit. Here’s a quick review!
AUD/JPY Downtrend Fib Pullback
After shorting the pair on a test of the Fibs to play the strong recent downtrend, this pair went into consolidation mode for much of August. This is likely due to both Australia and Japan putting out some pretty good economic numbers, making a case for forex traders to own a little bit of both along the way.
Most of the time in the trade I was profitable, but that pesky 86.00 handle wouldn’t break despite three attempts by the bears to tear it down, even after another North Korean missile launch sent the markets in major risk-off mode last week!
This goes to show how strong broad risk-on sentiment is thanks to improving global economic data, which is not a great environment for being long some of the safe haven currencies like the Japanese yen. With that in mind and the buying support around 87.00 after the upside break this week, I decided to close manually today at 87.75 for a small loss.
Total: -85 pips/-0.28% loss on 0.50% risk
In hindsight, I probably should have closed right after 87.00 held as support, but I wanted to see if NFP would spark some risk-off moves as the data was expected to come in weaker, like how my main man Forex Gump predicted by looking at the historical tendencies. Unfortunately, we didn’t get that kind of move, but I think it was the right play to hold given the situation.
Fib Bounce in GBP/CAD Downtrend
Fortunately, I had a winning trade to cover my AUD/JPY loss with my idea to short GBP/CAD. As hoped, the pair did see sellers take back control after retesting the broken support area around 1.6300, which was also the beginning of the Fibonacci retracement area of the latest down swing move.
A big help for my trade came in the form of a very strong Canadian GDP report on Thursday, coming in at a very big 4.5% vs. the expected growth of 3.7% in the second quarter. Forex traders jumped in big time onto the Loonie bull train, which took GBP/CAD lower quickly to breakdown a couple of hundred pips in a day.
With stochastic signaling potentially short-term oversold conditions and the long weekend ahead, I decided to take the profit by closing the trade manually at 1.6045 for a nice quick gain:
Total: +245 pips/+0.33% gain on 0.50% risk
I don’t think I could have played that trade any better…it was a text book setup around potential catalysts, and fortunately it all went my way. I don’t think I would do anything differently.
And that’s a wrap for the week, and with fresh economic data coming in from around the globe now that we’re in the new month, I’m gonna do a bit of re-assessing this weekend to see if my directional biases make sense. Until then, thanks for checking me out and have a great weekend!
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