Trade Closed: 2011-11-10 22:23
To be honest, I didn’t quite see that big drop coming. After AUD/CAD had formed three consecutive dojis on the 4-hour chart, I wasn’t quite expecting to see a sharp spike down on the following candle.
The Australian dollar was one of the weakest performing currencies in the markets yesterday, and unfortunately for me, this led to my trade getting stopped out just a couple of hours after I entered my position.
Stopped out at 1.0330: -65 pips / -1.0%
It’s been a tough week in the markets so far, especially with all the shifts in risk sentiment. Price action has been really choppy and it’s getting tougher to gauge overall market sentiment. Still, it’s times like these when we can grow as traders and expand our horizons. I’m looking forward to next week’s Weekly Winner to see what setups I may have missed.
For now, I’ll have to clear my head and play some Modern Warfare 3. Hopefully I won’t be easy pickings for all you experts out there!
Trade Idea: 2011-11-10 01:16
Does anyone else here think that the sell-off in AUD/CAD is overdone? It’s been going nowhere but down since the start of the week! Actually, it has already travelled its full weekly average true range (WATR) in one direction, which is why I think it’s due to turn up.
If you take a look at the 4-hour chart of this bad boy, you’ll notice that it’s currently chilling right above a former support area. As a matter of fact, it has already formed three dojis in a row! Adding to that, Stochastic has been signaling oversold conditions for a while now. Seems like a legit setup to me!
Here’s how I plan to trade this pair:
Buy AUD/CAD at market (1.0395), stop loss at 1.0330, profit target at 1.0500.
I set my stop a few pips below the support level because I think that if the area of 1.0370 breaks down, the pair will likely keep falling… maybe all the way to parity! As for my profit target, I didn’t want to get too ambitious so I set my eye on 1.0500 since it was a key former resistance level back in September. I may even consider exiting earlier if the market sends me the right signs!