Trade Review: AUD/JPY Post-Election Downtrend

Bah, it looks like volatility got the better of me on this one! Gonna chalk this AUD/JPY post-election trade as a costly lesson on patience. In case you missed it, better check out my initial trade idea first.

Short AUD/JPY Setup

I had my one good eye on this AUD/JPY long-term descending channel for quite some time so you can imagine my excitement when price started heading south from the resistance when the election results from each U.S. state started rolling in. When it became apparent that Trump would run off with a win, risk aversion looked ready to make a big entrance so I shorted at market.

However, the tide started to turn as the U.S. session drew closer and traders started to entertain the idea that a Trump presidency might not mean the end of the world. Heck, he actually sounded presidential during his victory speech! Besides, Trump did promise to cut corporate taxes, increase fiscal stimulus, and promote banking deregulation – all of which would be favorable for U.S. businesses.

Because of this sentiment, U.S. markets closed higher for the day, and the day after that, and the day after that, effectively shoring up risk appetite until the end of the week.

AUD/JPY Daily Forex Chart

AUD/JPY Daily Forex Chart

And with that, AUD/JPY spiked right back up to the channel resistance and is even attempting to break higher, hitting my stop above the 82.00 major psychological level in the process. I really should’ve cut my losses when I had the chance, but I guess I was caught up in thinking that the risk rallies probably won’t last and that The Donald would have some brash comments that would revive market jitters again.

In hindsight, I probably should’ve just sat on my hands during those volatile hours and waited for the post-election dust to settle before taking any trades. I remember thinking that the market reaction might be similar to that of the EU referendum when the pound sold off almost non-stop and dragged higher-yielders along with it when Brexit emerged as the likely outcome.

Anyway, here’s the damage:

P/L: -495 pips / -0.50%

I’m still hurting from this loss, but I know I gotta do a better job of picking my setups and sticking to my trade plan so that I can bounce back before the end of the month. Got any currency cross setups you’d like to share?

As always, don’t risk more than 1% of your account on a single trade and make sure you read our risk disclosure if you’re thinking of taking the same setups.

Q3 2016 Trading Performance Review
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Risk Disclosure