With potentially volatile events for the Aussie & Sterling coming up, I decided to take a small forex position in a sweet looking GBP/AUD downtrend.
This week we’ve got employment data from both the U.K. and Australia, so the volatility should pick up nicely for a short-term position in GBP/AUD. The trend is currently to the downside, and the market is hitting an area that arguably may draw in technical sellers:
- 61% Fibonacci retracement area
- 200 simple moving average
- Broken support, now potential resistance area
So, I’m short-term short bias because of recent price action, but I’ll look to be very conservative with my position size and entry because of the importance of the upcoming events. I’m going with a tiny quarter position just above the current market levels, with a wide stop above the recent swing high (2.1349) and targeting the recent swing low for a nice R:R. Here’s what I’m doing:
Short quarter position GBP/AUD at 2.1200, max stop at 2.1450, max profit target at 2.0800
I’m only risking 0.25% of my account on this one, and with this trade structure, I have a potential reward-to-risk ratio of about 1.66:1. Of course, anything can happen in the forex markets, so if the story changes I’ll be sure to reassess and adjust quickly if necessary. Stay tuned!