An inside bar/fake-out setup formed in the EURCAD minor pair last week. These types of setups can be very powerful false break signals where large numbers of retail traders were tricked into going one direction and price immediately whips in the other direction, trapping these traders. That can provide strong movement in the other direction as these traders are forced to liquidate losing positions. This setup has already ran up about 100 pips since my entry point and I will be looking to move my mental stop up to break even going into next week, essentially locking in a free trade and attempting to bag my original 3-to-1 RR.
Trade active:
Today's price action frustratingly produced a large bearish pin bar which unfortunately came off of an area of near term resistance I had marked. I can't really tell if this was the market being pushed around on thin volume or if a reversal is imminent. Since we could see price rotate lower from this bearish pin bar I will likely close half of my position when markets open on Sunday. If we see price rotate lower than then throw another bullish price action candlestick I will buy enter back in with my half-position size and still be long but with an improved cost basis. If price continues lower without recovering I will be stopped out at break even.
Comment:
The market gapped up by a fair amount over the weekend which is a solidly bullish sign. For now I will keep the full position open in hopes that the bearish pin bar gets steamrolled. If price turns sharply lower I will likely close my full position to lock in profits.
Trade closed manually:
Closed EURCAD but will keep my AUDCAD trade for a reduced risk, short CAD trade.