Trade Idea: 2011-09-15 2:44
Meanwhile, the Australian dollar has been one of the biggest losers so far this week. Apparently, traders believe that the Reserve Bank of Australia will not be raising rates any time soon and may even have to cut rates in light of the lack of progress in the global recovery.
This has caused the Aussie to drop 5 days in a row, which also led to my position being stopped out!
Stopped out at 1.3315: -97 pips / -1.0%
To be honest, I was feeling pretty confident with this one. I thought I had the fundamentals and technicals all lined up. The 50.0% Fib also held like a champ for the longest time and I felt it was only a matter of time before the pair would head back down.
However, the market had other plans, and now the pair is testing last week’s highs! What I thought would be a sweet trade turned out to be a loser that left a bitter taste in my mouth. This just goes to show that anything can happen in forex and the market won’t always react the way you think it should!
I still believe that this was a solid setup. It’s one that I would take ten times out of ten. It just so happened that it didn’t work out for me this time. On the bright side, because I practiced smart risk management, my account only took a 1.0% hit on this one, so not much harm done.
For those of you who took this setup, I hope you guys didn’t get burned too much. Don’t worry though, we’ll bounce back on the next one! Peace and thanks for following!
Trade Idea: 2011-09-13 1:34
I actually spotted this setup yesterday, but I didn’t want to jump the gun just yet. I wanted to see if resistance would hold first. So you can bet your bottom dollar that I was happy as heck to see that it did this morning! A doji even formed right on the 50% Fib level!
Fundamentally speaking, I think now is a good time to short this pair. Yesterday allowed the pair to pull back strongly as Australia had published weak trade balance figures. But again, I see this as nothing more than a pullback. I believe the euro will come under selling pressure again as the markets remain focused on the euro zone debt crisis.
Anyway, after seeing that sexy candlestick form right on 1.3220, where a former support level and the 50% Fib level were located, I decided not to wait any longer and entered at market then and there. I pulled the trigger and said, “It’s go time, baby!”
Here’s how I set up my trade:
In case you’re wondering, I set my stop loss just a few pips above the 1.3300 handle because if price reaches that level, it would rule out a retracement and my trade idea would be invalidated. As for my profit target, 1.3000, the former low, is my ultimate goal, but I may decide to bank profits if price stalls at the week open or the previous week low.