The EUR/CAD responded (in a secondary reaction) to European news about financial planning (monetary policy) and the north side of our EUR/CAD 2-hour trade broke north.
As I spoke about in the previous discussion, if the market crossed the range created between the two blue lines, we were not to make an entry in either direction until we found a good “sell high” or “buy low” price by waiting for a test of the top or bottom of the range, depending on the direction of the break.
With the news response, the price action broke north and did indeed provide us with a nicer buy low price after the breakout. I had a pending buy ready — 2-1 risk versus reward and closed out a 55 pip trade. I see the yearly target as the long term exit with the most immediacy as noted in the screenshot below. PLEASE NOTE: I do not believe price will continue at this level of power for long. We may see an additional pullback and re-test of the low we’re looking at, and if this happens I have a pending buy at that level waiting, as you can see noted in the blue dotted line. The stop for the pending order is below the bottom line at 1.4150.
Now onto a newer opportunity in the USD/JPY with the same Target Strategy. Again we favor a pullback on this trade now that price seems to be unstable at this high. In addition, we see we are at a strong resistance level, which the market has seen many times in its recent past.
In addition, over the next day or so we may also have a crown shape up here for us, leaving us with a very nice situation where we can trade the RIGHT side of the crown in this mini-level of consolidation. This trade could potentially be a center tip forming today or tonight in my opinion. We will know soon and again we could potentially get two trades with 1-4 risk versus reward. However, that right tip trade will be in the opposite direction and likely exit at the .382 pullback of the major downswing here. It’s a bit too far off in the future to tell.
As you can see, I have several pending sells waiting on this sort of negative space trade we have seen so many times in the past. Again, we have un-hit weekly and monthly targets right next to each other acting like magnets pulling on this market. We are at the top of this little range and the market has hit the major down A/B’s at the .236 level. The market has been fairly strong here, so we can get a nice risk of about 22 pips about this current range as a stop, and a reward of around 88 pips. Note: I have an additional pending sell exiting at the weekly target in purple ready to go. In my opinion, if price action continues here as it has, I am willing to risk another small lot size with the same exact stop as the market goes an additional 25 pips in my favor.
Once again, we don’t need to win a lot of 1-4 trades to do well.! I wish I could have set this up as a pseudo-straddle, but unlike the previous opportunity on EUR/CAD we do not have the nice little range established here. This makes it a bit tougher, but again a 22 pip risk is not much and we are on to the next thing for the day! We may see a crown form again here giving us some upside potential. However, in my opinion, that is possibly a week or two in the future. Don’t forget — the pending orders you see have nothing to do with potential trades a week or two in the future.