Trade Cancelled: 2010-08-13 04:25
Ha! So much for my trade idea! It looks like EURAUD broke the rising support line. I guess it’s time to cancel my trade!
Thanks to risk aversion, the euro took a hit this week and dropped across the board. Don’t believe me? Look at that EURUSD chart – the pair fell 300 pips on Wednesday!
Yes, the Aussie did drop when I posted this trade idea, but even the worse than expected employment data could send the EURAUD flying up the charts. It seems that risk aversion is slowly becoming the new dominant market theme, and if this keeps up, we may just see the euro give up its gains from the past two months.
I decided to just cancel my trade when the pair broke below the rising trend line. This invalidates my trade idea, so it’s time that I take off my orders.
Trade cancelled – 0 pips / 0%
I don’t feel too bad about this one. After all, I took a directional bias and well, I just didn’t expect to see so much euro weakness. Hmmm.. maybe I should start looking for some short euro setups for next week…
Trade Idea: 2010-08-11 04:25
I’ve been scavenging across the charts looking for some decent setups on the cross pairs and I think I finally found one on EURAUD. The pair has been consolidating as of late and seems to be forming an symmetrical triangle. Is a breakout in the cards?
I decided to hop on over to the daily chart to help me find a directional bias for this setup. I see that the rising support line of the symmetrical triangle also happens to be part of a longer term rising trend line. For this reason, I will be looking for a breakout to the topside.
From a fundamental standpoint, going long with EURAUD makes a lot of sense to me. I read Forex Gump’s post on the Aussie yesterday, and it looks like it might be in for a prolonged period of weakness given Australia’s weak inflation, retail sales and housing market. Oh, and let’s not forget the economic slowdown analysts are predicting for China!
On the other hand, the euro might find additional support later this week. Just a couple days ago we received news that Germany’s exports surged in June. Its awesome exports could carry over to its preliminary GDP figures for Q2 2010 due on Friday.
But the one report that I believe could bust this pair out of its consolidation is the Australian employment report coming out tomorrow at 1:30 am GMT. The report is expected to show that just 20,100 jobs were added to the economy, much worse than 45,900 the previous month.
I’ll be setting my orders at 1.4510, which is above this week’s highs. I think if price closes above the 1.4500 handle, we could see the pair continue to shoot up. I’ve set my stop at 1.4360, which would put it past the rising support line and past this week’s lows. Now, I”m going to be pretty ambitious on this trade, as I’ve set my take profit point at 1.4900, slightly lower than the previous major highs.
Long EURAUD at 1.4510, stop loss at 1.4360, take profit at 1.4940
Now if we see the pair continue to rise, I’ll be looking to press this sucker and add half my original position every 150 pips, while moving my stop accordingly. If all goes according to plan, this would give me a slick 5:1 reward to risk ratio!
That’s all for now! Hopefully everything works out for me and I score a touchdown on this trade! Thanks for checking out my blog! You can also check out my previous posts at MeetPips.com!