Trade Closed: GBP/NZD Reversing Lower?
A couple of weeks ago, I decided to play a series of short technical signals (head-and-shoulders at Fibs/major psychological level) on GBP/NZD with the fundamental bias that the Brexit situation would likely worsen as a deal looked less and less probable of a happy ending.
Since then, that neckline breakdown and Fib resistance at 1.9000 failed to draw selling momentum, likely due to broad NZD weakness last week on weak Asia trade. And today, British PM Theresa May promised U.K. parliament a vote to delay Brexit which resulted in the pound shooting higher as the odds of a no-deal Brexit were greatly reduce after this event.
So, the fundamental driver has changed for me in the short-term for the British pound, and with prices set to move higher from here, I decided to close this trade down manually at market (1.9244).
Total: -534 pips / -0.58% on 1.00% total max risk
Not a bad loss for what seemed like a pretty solid setup, and probably the only thing I would have done differently was to scale in as I usually do rather than start with a full position. I was pretty confident on this trade though because of the stream of negative news coming from the the U.K., so I don’t think going in at full position was the wrong move.
Trade Closed: CAD/JPY Upside Breakout Ahead?
Last week, I decided to go with the uptrend in CAD/JPY if it was able to break above the strong resistance area around 84.00. I chose this play because of the improving global risk sentiment thanks to optimism growing with the U.S.-China trade story and how it not only lifted “risk-on” currencies (like the Loonie) but also oil prices which the Loonie is strongly related to.
Unfortunately, the upside break and momentum didn’t last very long. The market is back below the 84.00, knocked down yesterday when oil fell after a tweet from U.S. President Donald Trump criticized OPEC for the high oil prices.
With upside momentum no where to be seen and the likelihood the U.S. President will continue to take jabs at high oil prices, I decided to close this trade down manually at market (83.94):
Total: -11 pips / -0.02% on 0.50% total max risk
So, a tiny scratch from this idea, which I still think is a good one in terms of the potential for CAD/JPY to rally given the bullish sentiment on U.S.-China negotiations. But it’s likely going to be a slow grind from here unless Trump ups his Twitter attacks on OPEC, or weakening global growth comes into focus. For now I’m staying away but keeping this pair on my watchlist to possibly re-enter in the next few weeks.
Stay tuned for updates and as always, good luck and good trading!
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