Comments from European Central Bank President Mario Draghi had the FX pairs hopping today, including CHF/JPY. The market shot well above major resistance to trigger my stop and close me out.
Originally, it looked like this pair was heading for a reversal back to the downside after a major triple top pattern and minor resistance around 114.00. After hopping in on the pullback to 114.00, it looks like the bulls were slowly gaining control, first after breaking above the resistance at 114.00, then the pattern of lower highs. This was likely due to a mix of broad risk-on sentiment and the recent Bank of Japan monetary policy meeting, which showed no signs of stopping or slowing Japanese government bond purchases. This combo seems to have awaken the yen bears, who have been solidly in control since then.
Then today, we got the ultimate boost for CHF/JPY bulls in the form of comments from ECB President Mario Draghi, sparking speculation that tweaks to the aggressively easy monetary policy may be on its way as soon as September. This sparked a rally in both the euro and Swiss franc, and that was all she wrote on my CHF/JPY short idea as the pair was able to break the previously strong major resistance area around 115.00 on to my stop at 115.85 to close out my trade.
P/L: -185 pips / -0.50% on 0.50% risk
In hindsight, it momentarily look like the bears would take back control around 115.00, which is why I didn’t close the trade early despite price action breaking above the minor resistance and lower highs pattern. But with Japanese yen bearishness in effect and Draghi coming up to speak, closing out early was probably the best move.
Hopefully, I can apply that lesson on a future trade or even on my current open positions on AUD/NZD and AUD/CAD, both of which are still chopping around their open prices. I will update on both soon so stay tuned, good luck and good trading!
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