The Bank of Canada monetary policy meeting has come and gone, so it’s time to take a quick look on how it affected my two Loonie trades in AUD/CAD and USD/CAD.
Trade Review: Falling Channel in AUD/CAD
No luck on my AUD/CAD idea, which was originally taken to play the positive economic data from Canada and expectations of a coming rate hike from the Bank of Canada.
I framed my trade around the falling channel pattern that the pair has formed and this past week, a technical setup was invalidated this week, likely on the latest string of positive economic data from Australia (better-than-expected retail sales, housing, and jobs numbers) and concerns on the Bank of Canada is leaning towards a dovish stance despite the rate hike.
All those factors put together, it’s no wonder that falling channel pattern failed, eventually pushing AUD/CAD up to my stop level at .9960 to close me out for a very small loss:
Total: -137 pips / -0.50% on 0.50% risk
Because of the recent flow of positive Aussie news, I’m stepping back from my bearish stance on the Australian dollar but I’m keeping my bullish stance on the Loonie for now. Canada’s economic data is still good enough to warrant further hikes, but pullbacks aren’t out of the question after it’s recent strong run. Overall, I wouldn’t change anything about this trade, other than probably to close it down sooner as the positive Aussie data came out and ahead of the BOC meeting.
Trade Update: Sellers Coming Back in USD/CAD?
So far so good on my USD/CAD short, which I entered on downside momentum after the pair found sellers at the Fibonacci retracement area and falling moving averages.
I’m still fundamentally biased in favor of the Loonie, as mentioned above, especially over the Greenback with issues of a potential U.S. government shutdown ahead and after some disappointing inflation data from the U.S. last week that likely paired back monetary policy tightening bets in the past few sessions.
So, I’m going to just sit on this trade for now, but I am watching for a break of the recent swing lows around 1.2350 to potentially to my position and roll down my stop, all to maximize my potential gain.
Stay tuned for those updates, as well as potential new trade on USD/JPY as the pair is playing out as I hoped in my USD/JPY Watchlist post. Until then, good luck and good trading!
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