It’s been a couple of weeks since entering a short EUR/CAD position, and with the trade in profit ahead of top tier economic catalysts ahead, I’ve decided to close and lock in profits to avoid event risk. Here’s a quick review!
EUR/CAD Descending Channel
In mid-May, I decided to play EUR/CAD to the short side to play my in favor of the Loonie (recovering oil prices, broad risk-on sentiment) over the euro. The pair was also in a descending channel pattern, so the price action favored my bias, increasing the odds of success.
Since then, the pair did make a bounce as hoped to trigger my second short order at a higher price (putting me in at an average price of 1.5327 with 1.00% max risk), and not too long after forming another top in the descending channel, the currency pair dropped on today’s trading session as the Loonie seems to be one of the best performing major currencies.
The pair is now testing a strong area of support within the channel, and with monetary policy statements from both the Bank of Canada and the European Central Bank this week, I’ve decided to lock in profits for now on this pair by closing the whole position down manually at 1.5132.
Total: +195 pips avg. / +0.87% gain on 1.00% risk taken
I think this pair is still due for further downside moves, but with a solid return-on-risk for less than a two-week hold, I think it makes sense to cut for now given the possibility of the ECB adding further stimulus measures (PEPP), which seem to have been a boost for the euro lately.
Depending on what we get from both central banks this week and the overall broad risk themes, I may enter this pay short again, but for now, I’ll be in watch mode.
Stay tuned for updates and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.
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