Decided to close this trade after another rally from the bottom of a rising channel in USD/CAD. Here’s a quick review!
Trade Review: Took Profits on USD/CAD Long
After buying at market at the bottom of the channel last week, USD/CAD made a swift move higher, possibly on global risk aversion sentiment supporting the Greenback last week, as well as some pressure on the Loonie from the recent fall in oil prices.
But the rally didn’t last long and actually reversed for another retest of the bottom of the rising channel, where buyers jumped back in once again this week, this time likely on renewed fears that the U.S.-China trade war could escalate.
The rally once again is enough to test the 1.3300 handle which to me was a good time to take profit on this trade. With December around the corner, that means we’ve got another round of fresh economic updates coming soon that could throw this trend off track.
Also, the pressure from falling oil prices on the Loonie could be fading away as crude oil has fallen all the way from the $75/barrel area to just above the $50/barrel area, which was a major consolidation area between 2016 – 2017 and therefore likely to draw in support / profit taking. So, it’s quite possible the oil sell off could be fading here, especially with OPEC considering an output cut to help support oil prices.
And from a technical standpoint, the 1.3300 area was a strong resistance area back in June – July 2018, so USD/CAD may have a tough time breaking through without further fresh catalysts as this pair could also draw in profit takers and technical traders.
With all of that in mind, I decided to close my USD/CAD long position manually this morning (1.3315) to lock in a profit:
Total: +100 pips; +0.30% gain on 0.50% risk
Overall, another good return-on-risk for just a week-long trade, but I probably could have done it twice given there was two quick rallies I probably could have played better by taking profits on the first and re-entering on a retest of the bottom of the channel.
I also could have added another position on the pullback to the bottom of the channel and tightened up my stop to max out the play, but I think I went the right route by holding steady and taking profits when I did.
With this trade closed closed out, I’ve got an empty book, but I am looking to add more pairs to my watchlist this week to help me grab pips into the end of 2018. So stay tuned for those updates and as always, good luck and good trading!
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