Trade Idea: 2012-11-14 01:50
After missing out on the euro crosses the past couple of weeks, I think it’s time to try my luck on a comdoll cross. And I gotta say, I like what I see on CAD/JPY!
The pair’s been trading in a range of about 200 pips over the past three months now, never trading below 79.00 or above 81.00. Currently, the pair’s approaching the bottom support line, and with Stochastic about to hit oversold conditions, I think it’s time to jump in!
The fundies also line up really nicely as well. The Canadian dollar has been pretty resilient over the past few months, while oil prices have also been rising lately.
Moreover, there’s always the ever present threat that the Bank of Japan will hit the markets with additional quantitative easing measures in order to weaken the yen.
Looking forward, the key events to keep an eye on that will have the biggest effect on CAD/JPY price action will be the BOJ monetary policy statement next Tuesday (November 20) and Canadian retail sales report next Thursday (November 22). Hopefully these reports work out in my favor!
Here’s how I plan to manage this trade:
Buy at 79.15, stop at 78.70, profit target at 81.00.
I’m buying just above the support level, just to increase the chances that I get triggered. What I like about this trade is that it gives me a sweet reward-to-risk ratio of 4:1! Since I’ll be risking 0.75% on this trade, that means if everything goes perfectly, I’ll be taking home a solid 3%!
