Welcome to another entry into my trading blog and journal. Today, I’m analyzing a trade that I took in the Forex pair CAD/JPY. Read on to see how this trade played out and what I learned from it.
I took this trade on a Tuesday before leaving for about a week. I went to San Diego for a few days, then spent some time with family in Michigan and didn’t get back until Tuesday. Wednesday, I wasn’t able to get a lot of work done due to some personal reasons, so I’m not journaling this trade until the following Friday (the 22nd).
The morning I took this trade, I liked CAD a lot. It had broken the highs of the range it had been trading in for several weeks, and was making a bit of a base. The breakout looked confirmed, so I wanted to get in. On the other hand, JPY wasn’t high on my list — it had been range-bound for a while prior to this trade, and price was sitting in the middle of the range. There was a key level in the middle of that range, though, so I was cautiously bearish.
Order
After going through the pairs I liked based on the baskets, I didn’t see much that I really wanted to trade. So, I checked a couple of things vs JPY just in case, which is how I came across CAD/JPY. Price here looked similar to CAD’s basket, as it had broken a pretty strong resistance area. There was a relatively strong push out of that area, followed by a slight pullback, which looked like a great pattern to trade in to. I set the entry order, around 10:30am, and waited for it to trigger.
Entry
Price didn’t make another push up as quickly as I’d hoped/anticipated, but it didn’t make a strong push down either, so I held on. I checked the chart several times throughout the day, and while the base was no longer in play, there was a pullback/retest that had formed, and the long play still looked viable.
Near the close of the US market, I decided I still liked the pattern, so I switched the stop to a trailing one, and left it alone for the night. I got the notification around 8 that my trade had triggered, and went to bed hoping for the best.
Exit
I didn’t see any of this happen, as I left the trade to work overnight. But after triggering my entry, price only managed to make a small push into profit before reversing pretty strong to stop me out. With the trailing stop, my exit wasn’t technically a full loss, but it was pretty close.
Maybe price was extended here, and I missed the move. That’s really the only thing I can see that would qualify as a mistake. While I’ve seen plenty of instances where price has remained in overbought (and oversold) areas for a sustained amount of time, I do technically use the RSI to try not to trade extended moves. I guess the other mistake was trading JPY when it was in the middle of a range, instead of reversing off of the highs (or breaking out itself).
Conclusion
Now that I’ve typed it out, I’m seeing that maybe this wasn’t a great trade. I need to be a bit more cognizant of extended moves and the RSI; and be better about not getting in to trades if it looks like the move is over.
I also don’t love that I traded JPY when overall it was in the middle of a range. But at the same time, baskets are averages, and are influenced by individual charts. It’s the individual charts that I actually take trades on, so if the movement and pattern is there, I can’t be that upset. Obviously I’ll look for my “primary” pairs first, but I don’t see too much harm in stepping a little outside of what the baskets are showing me.
Overall, if I had to grade this trade, I’d give it a C. I liked the pair for a lot of reasons, but ended up being a little bit impatient with my entry. Looking today, though, I was right about this pair as it’s pushed well above my target. Timing is everything.
Thanks for reading! What did you think about this trade? Were you able to catch any profits in this pair or any others? Let me know in the comments below. And stay tuned for more Forex trades and analysis.