I’ve rolled my stop much lower to lock in a few more pips on this EUR/AUD trade, but I’m also seeing a bit of a correction. Do you think I should add to my position or just let it ride? In case you missed it, take a look at my initial trade idea first!
In my latest blog post on my trade adjustments, I noted that I trailed my stop just slightly below my entry for a risk-free position with some change. Price was starting to test a major support area visible on the weekly time frame at that point so I wanted to minimize my exposure in case the pair makes a strong bounce off the floor.
Recent developments in the euro zone and Australia allowed that 1.3800 support area to break, though, and EUR/AUD went on to reach lows around 1.3726. From there, the pair showed signs of pulling back so I applied the handy-dandy Fib tool to see how high it could go.
So far, the area of interest around 1.3850 is keeping gains in check while stochastic is indicating overbought conditions. Sellers could get back in the game once the oscillator turns lower, possibly taking price back down to the swing low or much lower. With that, I’ve decided to move my stop just past the 1.3900 mark and 61.8% Fib to lock in more gains and reduce risk.
I can’t help but wonder if I should be pressing my advantage right here by adding to my short position once price shows that it’s ready to resume its drop. Australia seems to be on much more solid footing compared to the euro zone, particularly with the Land Down Under’s recent jobs report printing stronger than expected results and the bloc’s flash GDP readings indicating a slowdown among its top economies.
Besides, Australia has its trade BFF China to count on as its latest batch of top-tier reports hint at stronger demand for raw materials and commodities down the line. In contrast, resurfacing Greek debt troubles and Italian bank concerns could keep dragging the shared currency down. Do you think this pair can go much lower?
If my adjusted SL gets hit, I’ll still be able to catch a 155-pip win or a 0.15% gain on this setup. 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.