Decided to close out my short positions on AUD/USD and USD/CAD as volatility is likely to remain low this holiday season and the Dollar trend seems to be shifting. Here’s a quick review!
AUD/USD Pullback Opportunity?
First the bad, but not so bad actually. Back at the beginning of December, I decided to put up short orders on AUD/USD if the pair bounced higher, to play my fundamental bias favoring the U.S. dollar over the Australian dollar. The pair did move higher over a week later to trigger my short position at 0.6890 with 0.50% max risk, and we actually saw some very convincing bearish candle patterns to suggest this could be a winner.
Unfortunately, the bearish sentiment did not last long as global risk sentiment continues to rise, and with the falling ‘highs’ pattern breaking (and the upward momentum likely to continue into the end of the year), I decided to close this trade manually today (0.6923) for a very, very small loss.
Total: -33 pips / -0.18% loss on 0.50% max risk
Overall, I’m still bullish on the Greenback over the Aussie based on the divergence between monetary policy outlooks and growth rates, but with global risk sentiment on the rise and the U.S.-China trade deal progressing positively, it’s probably a good idea to lean bullish on the pair for now, especially if we see the buying patterns hold at the start of the new year.
Top of Range to Hold on USD/CAD?
Now on the good. At the end of November, I decided to short USD/CAD with a full position at the top of a longer-term price range, based on relatively positive economic data and BOC monetary policy outlook, versus the Federal Reserve that was likely to keep rates very low, or at the very least, had an extremely low probability of hiking interest rates.
This trade turned out pretty well, and about a week ago, I decided to lock in some profits by closing half the position down and rolling my max stop lower. Now with the holiday season ahead likely to be a low volatility one, and I think the momentum for this idea is gone as support seems to be forming around the 1.3100 – 1.3150 area.
Given that it seems the opportunity for more gains is gone and the possibility of giving back more gains seems to be rising, I decided to close my remaining position out at market today (1.3152).
1st Half: +98 pips
2nd Half: +118 pips
Total: +108 pips/avg. / +0.675% on 1.00% max risk
Overall, between these two trades it was a net gain of 0.495% on 1.50% risk taken in just a few weeks. That’s not a bad return-on-risk, especially in this constantly shifting geopolitical environment and era of low currency volatility. And with the end of 2019 quickly approaching, I will do my quarterly review soon and see if there are any improvements I can make for 2020.
Stay tuned for that, and until then, thanks for checking out my blog….good luck, good trading, and have a happy and safe holiday!
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