This article is Part 2 of a series.
It looks like I caught a bit of luck with my CAD/JPY short idea, but there may be little bit of technical trouble ahead for the bears. Here’s a quick adjustment to reduce risk and lock in a profit. Let’s get it.
CAD/JPY Range Resistance?
Last week, I decided to short CAD/JPY on my fundamental bias against the Canadian dollar and the potential for no production cut from the OPEC meeting. I also shorted the pair as it retested the top of a ranging pattern going back to the beginning of March.
And since then, the pair has made its way lower, partly on a shift back to global risk aversion sentiment as global recession worries rise, and while we did cut a production cut agreement from OPEC, oil prices have fallen as traders focused on the demand destruction and massive inventory rises due to the global lockdown.
So, everything is going well for this trade as it is up around 0.38% or roughly 77% return-on-risk
With the potential for a short-term bounce ahead, I decided to reduce my risk / lock in a tiny profit in case this turns into a major buying area, especially if global risk sentiment turns positive again. Here’s what I did:
Rolled stop down to 77.50 to lock in 0.06% gain on 0.50% original risk.
Rolled max target down to 74.00 (the next major support area) to increase max return from 0.68% to 0.94%.
As you can see above, this has basically become a risk-free trade with the potential to make more than I originally planned. I like trades like this and looking forward, I may add to this position if the downside momentum still holds after this retest.
If global risk sentiment does shift to put pressure on the Japanese yen, then I will look to close the trade down manually early.
Stay tuned for those potential adjustments and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.
This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.
Read more about this trade idea's development over time.
CAD/JPY is back to retesting the top of a range that goes back to early March. Is it time for the bears to step in once again?
Here’s a quick adjustment on my CAD/JPY short trade to reduce risk and lock in a profit ahead of potential technical obstacle for the bears. Check it out!
Time to re-visit my two open plays in GBP/USD and CAD/JPY to make adjustments to the recent news and shifts in broad risk sentiment and FX biases.
After adjusting my trade plan on CAD/JPY, the pair spiked higher before the end of last week and triggered my tight stop to close me out for a small gain.