After adjusting my stop to reduce risk, it seems like EUR/JPY still has yet to budge as consolidation continues. With momentum gone, I decided to take profits on my short position.
Trade Review: Took Profits on EUR/JPY Short
After dropping as far low as 127.50 earlier in November, EUR/JPY has since bounce higher and spent most of its time trading around the 129.00 handle.
There was also a pattern of higher ‘lows’ forming within the consolidation, which was signaling to me that the improving global risk sentiment recently could lead to an upside breakout of that 129.00 area resistance. With the fundie environment and price action pointing to a rally, I thought that the momentum was over and it was time to get out.
Fortunately for my trade today, the latest European PMI numbers were released today, showing a broad decline in business sentiment. This sent the euro broadly lower against the majors today, including EUR/JPY which fell from just below 129.00 to test the 128.00 area. This area held as support earlier in the week and in the previous week, so I thought this would be a great place to take the trade off for a profit. So, I closed my EUR/JPY short manually this morning at 128.14:
Total: +186 pips; +0.23% gain on 0.25% risk
Overall, a good return-on-risk, but I went pretty small to start with thinking there would be a higher bounce earlier in November and I wanted to scale into a bigger position.
I probably could have added again when 129.00 held as resistance, but with the higher ‘lows’ forming, I didn’t think a down move was in the cards short-term so I didn’t make a move there. I also could have rolled my stop all the way down to 128.00 when momentum was strong, which might have a been a better move. I could have taken profits earlier and taken another short at 129.00 when it was retested.
With negative sentiment rising in Europe on Italy’s budget issues and now a potential economic slow down based on the latest PMI data, I’m still bearish on EUR/JPY, but I’m going to wait to see which way out of this current consolidation it’ll break before hopping back in. Look out for a fresh idea when that happens.
With this trade close, that just leaves my recent long on USD/CAD, which has seen volatility pick up in recent sessions, especially with oil prices still falling. I may have to adjust soon and take profits while they’re hot, so stay tuned for those adjustments!
That’s if for now. Thanks for checking out my blog and as always, good luck and good trading!
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