The Trade: Long CAD/JPY & Short GBP/JPY
The correlation between these two pairs is 77% over the past year. The widest the spread has got over that time is about 800 Pips. Currently these two pairs are 600 Pips apart. The GBP/JPY has enjoyed a nice run-up lately which may be stretched, bumping up against some near term resistance.
With that said we will be entering 1/2 our intended position size with the intentions of easing into the second half if the spread widens significantly. We expect to see this spread narrow over the coming days/weeks. If it happens before we can put our entire position on we will feel comfortable closing out the position with a profit of any amount. Keep in mind there is a national holiday in Canada today with its banks closed.
This idea was signaled from our cutting edge Unique Forex Forecasting Indicator which uses our proprietary algorithm to predict future price action. Unlike standard lagging indicators, ours gives forecasts in real-time. Anyone is welcome to try it for free at http://www.forextrading.unique4x.com