For probably my last trade idea of the year, I’m going with another textbook trend setup on EUR/CAD to hopefully grab some last minute pips for 2017!
Trade Idea: Rising Trend in EUR/CAD
Comments from the ECB to keep easy money around is taking down the euro today, which I think is an opportunity to play the uptrend above in EUR/CAD.
Once we get past this event, I think traders will get back to recognizing the strong economic numbers in Europe (especially today’s European PMI numbers) will likely continue to attract the bulls in favor over some of the weaker majors like the Canadian dollar.
And I chose the Canadian dollar to play against the euro, not only because of several catalysts ahead next week like Canadian CPI and GDP data, but also on comments from Bank of Canada governor Poloz and his concerns, most notably downside inflation risk and NAFTA uncertainty.
With those arguments in mind, I am looking to go long with just a little more pullback to the major psychological handle and the rising lows. We could see some buying support there once again, but likely after a bit of choppiness since we just got past the ECB monetary policy statement.
My stop will be my usual weekly ATR stop to limit my max risk. My target will be the recent swing highs for a good short-term potential return-on-risk . Here’s what I’m doing:
Long half position at 1.5000, max stop at 1.4720, max target at 1.5350
I’ll be risking only 0.5% of my account on this position and with this framework, I have a potential max return-on-risk of around 1.25:1! Stay tuned for updates and adjustments, especially at the end of next week when I wrap up for the year…and until then, good luck and good trading!
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