The Aussie gets slammed in today’s trade thanks to the strong Greenback and falling commodity prices, especially gold. The move was enough to push EUR/AUD quickly to my stop and take me out. Time to do a quick review.
Original Trade Idea: Support Break Forex Trade on EUR/AUD
Not only was the Australian dollar lower on a strong Greenback (higher on Republicans taking both houses of Congress) and weak commodity prices (gold lower by another -1.82% to new lows around 1,146.40), but also weak services PMI data from China, one of Australia’s major trading partners. Basically, the Aussie was killed across the board. And with the news story showing that ECB President Mario Draghi may not be getting support from fellow ECB board members for quantitative easing, taking away some of the QE premium built into the euro over the past couple of weeks.
So, while the simple support break trade was looking good at the moment, it was new news stories that quickly changed the tide for the pair and took me out at my stop at 1.4530.
Total: -260 pips/ -1.00% loss
The only thing I would have done differently looking back was to close the trade early to limit my loss after the pair went above the previous support level and held on another re-test as pointed out on the chart. I did have a chance to close earlier after reading about Draghi’s troubles with his fellow board members, but I thought the positive NZ jobs data might provide some support to the comdolls since that is what we sometimes see between the two neighboring countries.
Overall, it was a good trade setup but the story changed and I didn’t adapt quickly enough on it. But still, it was a tiny loss to my account, so I get to live and trade another day. I’m doing that with my open GBP/CAD short (now re-testing the resistance area around 1.8250) and my potential short on EUR/JPY at a major resistance area. No new ideas for now until we get passed the central bank meetings and NFP, but stay tuned as I may have to adjust quickly depending on what we see from the ECB and BOE tomorrow.