The past week has been interesting. Trump has ordered the US military to plan an invasion to seize the Panama Canal. Why? Excessive tolls on US ships, of course. Reuters provides a great explainer on the history of the Panama Canal and Trump's demands.
In addition, some speculate Trump's escalating trade war (and maybe real war) threats is leading to a positive sentiment of Chinese markets. In the short run, this may lead to unpredictable volatility, especially in the western markets.
On the other hand, volatility died down in the FX market last week, which I was slow to adapt. In terms of my trading performance, I returned some profits back to the market as I took on bigger positions that didn't end up winning.
There are a few trades I want to highlight. Let's jump into the recap.
Trade Recap
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| AUD/CHF Daily |
I took a short position on both the AUD/CHF and NZD/CHF pairs. They have very similar price action movements on both the daily and 1-hour timeframes so I will just show this analysis on the AUD/CHF pair.
On the daily timeframe, AUD/CHF was testing a key level that price traded at twice before. When price came down to this level in December 2024, it failed to make any significant reversal movements.
Since price drifted higher, this was a good indication for me to enter a short position when price crossed below this level on March 10th.
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| AUD/CHF 1-Hour |
Unfortunately, momentum did not sustain. Price quickly reversed and hit my stop loss. I took a string of losses before acknowledging volatility died down. It seems more traders were waiting on the sidelines, monitoring the development of Trump's tariffs, trade wars, and efficiency policies.
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| CAD/JPY Daily |
I took another loss on CAD/JPY. This pair had very similar structure as AUD/CHF. The key difference is that my entry was based on a minor level on the daily timeframe.
Price breached the lowest level and that was my indication to try and make a trend continuation plan. I entered short, and was stopped out not too long after.
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| CAD/JPY 1-Hour |
When momentum dies down, it's really noticeable. Pairs move slower, and they move in a mean reversion manner.
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| NZD/CAD Daily |
The final trade that I'll highlight was a winner. I took this counter-trend setup on the NZD/CAD pair.
Since September 2024, this pair was in a downtrend. In late-January, the price action started to indicate a reversal was likely to occur.
Following my setup and trading plan, I entered into a long position after price breached above the upper level I established. This level comes into play for my entry decision after price crossed above the trendline.
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| NZD/CAD 1-Hour |
On the hourly timeframe, I followed my exact methodology. I plotted an hourly (Darvas) range and waited for price to exit to this range on the upside. As soon as it did, this was my signal to enter into the long position.
Fortunately, there was some momentum on this pair. It went in my favor and hit my take profit fairly quickly.
Based on last week's experience, there is one key lesson here: be agile in sizing down and up depending on market conditions. I guess you can also consider don't take too many trades at once another key lesson.
Pairs-in-Play (PiP)
For the week ahead, there are a few pairs in play, and they all follow the same price action. These pairs are:
- EUR/AUD
- EUR/CAD
- EUR/NZD
- GBP/AUD
- GBP/CAD
- GBP/SGD
- USD/JPY
I'll use EUR/NZD as an example.
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| EUR/NZD Daily |
On the daily timeframe, this massive run-up has come to an end. This is my counter-trend signal as price closed below the trendline and horizontal level at end-of-day Friday.
This signal doesn't necessarily mean that a downtrend is to be expected next week, or next few weeks. However, it does indicate that traders are unloading the massive euro position against the New Zealand dollar.
There is an opportunity to follow my system of targeting 0.5x daily ATR for the counter-trend move.
