[B]My picks:[/B] Long AUDCAD
[B]Expertise:[/B] Combining Money Management with Fundamental and Technical Analysis
[B]Average Time Frame of Trades:[/B] 3 days - 1 week
The demand for yield that has supported the commodity bloc on and off for the past few months is settling into an extended weekend. However the general bias is still in place and it has supported my CADJPY position from last week. With an entry just above 80 last Friday; my position would immediately be put into the money the following Monday after a 250-point plus rally. This easily covered my first target (set equal to risk) and I have trailed the cutting point on the remainder of my position up to 82.30 - below the recent congestion low.
As my previous position has no risk attached to it, I am free to look over the rest of the commodity bloc without worry about exposure. My interest today follows the range strategy I laid out yesterday in AUDCAD. This pair has followed a rising trend line since the beginning of February; and just recently, this technical guide has met a round of significant indicators for support (including the 20-day SMA, a number of Fib retracement and the range of lows from the past two weeks). For now, the position is range-based with a heavily fortified floor; which makes setting up the parameters for a trade relatively ease. My entry on two lots will be placed at 0.8815 (the spread is relatively wide on this pair), my stops will be set to 0.8740 and the first target will equal the risk taken (75 pips) at 0.8890. This position will eventual evolve from congestion to a breakout and potentially even a renewed trend. As such, considering the market goes my way, I will set the second objective far higher at 0.9285. In the meantime, after the first target is hit; I will trail the stop on the second half of my position to make sure risk is stamped out as quickly as possible. Taking note of the risk in this setup, we may also see a bearish break from congestion that that could be encouraged by the unusual liquidity through the holiday period. If we do see a close below 0.8780 (which would stop me out), I will start formulating a short-term reversal play through momentum.