It looks like my CHF/JPY and NZD/USD short plays have been working out well, so now it’s time to adjust my plans to lock in some profits and maximize my gains. Check it out!
Trade Update: Consolidation Breakout on CHF/JPY?
Back in mid-April, I shorted CHF/JPY on a wedge break to play a weakening Swiss franc that was falling with the euro. Since then, the bears have really taken over CHF/JPY on souring sentiment on the Swiss franc after SNB Governor Jordan reaffirms their openness to currency intervention, and on broad risk aversion sentiment that has grown over the past few weeks on disappointing global economic updates and growing issues with the U.S.-China trade negotiations.
The pair has fallen to trade right around the 108.00 handle at the moment, more than one weekly ATR move from my entry level at 110.21. With the pair now closer to the early 2019 flash crash low around 106.00, I have decided to lock in some profits by rolling down my stop to 109.15 to lock in roughly a 0.50% gain on my original 1.00% max risk. And given the strong momentum to the downside, I have removed my max profit target order at 106.20 to maximize my potential gain.
As time goes on, I’ll continue to reassess this trade and potentially add to the position if it makes sense to do so.
Trade Update: Wedge Breakdown on NZD/USD
After throwing up short orders to play the wedge breakdown and fundie bias towards the Greenback over the Kiwi, the pair did bounce enough to trigger my first set of short orders at 0.6650. And after finding resistance there, the bears took back control, leading up to what was a somewhat an expected rate cut by the RBNZ but a surprise that there may be more cuts to come. The Kiwi spiked lower on the news, but quickly found its way be to pre-event levels very quickly.
With the RBNZ out of the way and the likelihood that my second set of orders will not be triggered, I thought it was time to adjust my plan to reduce risk and maximize my trade in case this pair has more room to run to the downside. Here’s what I did:
- Cancelled my short orders at 0.6725
- Added second short order to sell at 0.6550 with 0.25% risk
- Max position stop at .6650
- Removed max profit target to increase the potential profitability of this trade
These adjustments effectively reduce my risk from 0.50% to 0.25% if my new second position is triggered. If not triggered, I have no risk as my original position will close at breakeven.
Looking forward, this pair does have decent odds of continuing the downtrend now that the RBNZ has cut rates and may potentially cut down the road, as well as global risk sentiment pressure coming from the U.S.-China trade negotiation developments.
Whatever may come down the road, it’s good to know that I’ve got two “risk-free” trades on with the potential to gain much more than my original risk. Feels good and that’s how trading should always be, right?
That’s it for now. Thanks for checking out my blog and stay tuned for updates and adjustments in case the market driving themes change, as they always do in the forex markets. Good luck and good trading!
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