AUD/NZD: Selling the Downtrend – Trade Closed

Trade Closed: 03-07-2012 02:56

AUD/NZD Chart

Just when I thought I got a nearly perfect entry, this trade blew up in my face!

I initially got triggered at 1.2750 and actually came within a few pips of triggering my second position. Once I was in the money by about 30 pips, I cancelled my second order as I didn’t think it would get hit any more. And boy, it’s a good thing I did too!

Thanks to some new developments following the EU summit, we saw some risk-taking take place last Friday. I thought I’d still be safe, since at least both the Aussie and the Kiwi were benefitting from the move. Besides, we don’t normally see such strong moves on AUD/NZD.

Unfortunately for me, traders were hungrier for the Aussie, and this bullishness carried right into the weekend! By the time I crawled out of my cave on Monday morning, I saw that my trade had been stopped out because AUD/NZD gapped up 40 pips higher!!!

Stopped out at 1.2820: – 70 pips / -0.30%

The one good thing I liked about this trade was my execution. I properly recognized that I needed to cancel my second order and acted appropriately. It was just some bad luck that the pair gapped up over the weekend and stopped out my position.

Overall, not a happy ending to the quarter for me. Make sure to tune back in tomorrow when I post my Q2 2012 Trading Performance report!

Trade Idea: 27-6-2012 01:19

I just love me a good solid trend, that’s why I couldn’t resist setting orders to sell AUD/NZD! Have a look, fellas!

AUD/NZD Chart

The technical aspect of this trade seems compelling to me. Open up AUD/NZD’s 4-hour chart and you’ll see a solid downtrend that has developed over the past four weeks.

Fundamentally, I understand why the Kiwi has been strengthening against the Aussie. Even though rate cut expectations have sort of tempered for the Reserve Bank of Australia, it still holds a more dovish stance than the Reserve Bank of New Zealand.

Lucky for me, I spotted this setup while price was on its way to the upper boundaries of the falling channel. Time to short this sucka!

Here’s how I set up my trade:

Sell first position at 1.2750, stop loss at 1.2820, profit target at 1.2650.
Sell second position at 1.2775, stop loss at 1.2820, profit target at 1.2650.

I set my first sell order at 1.2750 because it’s a nice round number and I think price could intersect the falling trend line in this area. My second sell order is placed at 1.2775 because I wanted to give this trade room in case the market spikes up. Plus, I noticed that 1.2775 was an area of interest back in May.

I set both stop losses above 1.2800 to give this trade room to breathe in case the pair decides to trade sideways. And as for my profit targets, I’m aiming for a new low at 1.2650, though I will consider exiting early if the market gives me signs to do so!

I’ll be risking just 0.30% of my account on each position which means that if both positions get triggered, a total of 0.60% will be at risk.

I’ve had some rotten luck as of late but hopefully this trade will bust me out of my slump!

So there you have it, fellas – my trade idea for the week. What do y’all think?

Q2 2012 Trading Performance Review
Weekly Watch: June 25 to 29, 2012
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10 comments

  1. cyclopipcyclopip Post author

    Hi guys! Just wanted to give you a quick heads up. The trade didn’t turn out the way I hoped it would, but I was able to limit my losses. I’ll fill you in on the details when I update the trade tomorrow.

    Thanks for following, fellas!

    Reply

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