Decided to manually close my USD/CAD short position after the BOC surprises traders with dovish commentary on the economy at their latest monetary policy meeting.
USD/CAD Fib Short Play
Almost a couple of weeks ago, I decided to short USD/CAD at a simple Fibonacci technical setup to play my fundamental bias favoring the Loonie over the US dollar. Unfortunately, the latest Bank of Canada’s monetary policy statement didn’t work out too well for this idea as they signaled less confidence on the economic outlook for Canada, which was a big surprise to traders given a mostly strong performance in 2019, despite recent signs of slowing down.
The Loonie dropped immediately on the release of the statement, at which time I decided to close down the position manually (1.3123) as USD/CAD pop higher to limit my loss, which was well below my max stop at 1.3210:
Total: -64 pips / -0.42% loss on 1.00% max risk
Overall, I think this was a good trade given how the fundamentals and technicals lined up at the time of the idea, it just didn’t work out as the story changed for the Loonie quickly thanks to the BOC.
And I’m happy with the adjustment to close when I did as it seems like USD/CAD is still on its way higher thanks to broad risk-off sentiment due to Coronavirus outbreak.
I’m now short-term bullish on USD/CAD for those previously mentioned reasons, but I’m holding off from starting a new position for now as I will continue to monitor further developments.
Stay tuned for that, and until then, thanks for checking out my blog….good luck, good trading, and have a happy weekend!
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