Cup with Handle in GBP-CAD.

I was gone most of last week and unable to publish regular updates. Still, currencies were volatile, with a lot of activity in many pairs, so I took a few trades. There were several important fundamental developments, affecting numerous markets. One of them was the GBP-CAD, which experienced above average price swings. Above average in relation to its most recent history, that is.

During the prior week, this pair had been consolidating, in the process creating a cup with handle chart pattern. Coming after a rally, it is often a sign of eventual continuation. This pattern was completed with a breakout above 1.8050 and I was waiting for it with a buy order at 1.8060. I closed half of the trade with 95 pips gain. While more upside was likely, the BoC had a policy meeting later in the day, and I wanted to limit my exposure. All the CAD pairs reacted sharply to the announcement and this cross brought another 200 pips on the balance of this position.

In my mind, the GBP-CAD became overextended at this point, and I started to look for correction. Since I could not follow the markets, my short entry was admittedly premature. The level was roughly correct, but the timing was a little off. The trade worked out good, though, producing 159 pips. I expect more volatility if Forex going forward, which should create more trading opportunities.

Mike K.