Four Ds on EUR/AUD! – Trade Closed

Trade Closed: 2012-08-01 02:11

EUR/AUD 4-hour Chart

The euro got a nice boost on comments by EU leaders that they would do whatever it takes to ensure the euro’s survival. Naturally, this sent Spanish yields lower and propped up the markets, allowing the euro erase some of its losses versus its major counterparts.

Unfortunately for me though, this led to my trade finally getting stopped out, as price spiked up above 1.1850.

What sucks though is that after getting stopped out, price reversed at 1.1850, as the Australian dollar proved to be the strongest of the higher-yielding currencies. EUR/AUD shot all the way down to my profit target at 1.1685! All those pips down the drain! Darn it!

Stopped out at 1.1850: -65 pips / -0.50%

I guess I was really pushing my luck on this trade after I avoided getting stopped out the first time. I probably should have moved my stop to break even once price found support at 1.1750 for the second time.

The only good thing about this trade is that I scaled down my risk and only lost 0.50% of my account.

That’s all for now! Hopefully I can find another nice setup this week and start off the month on a solid note!

Trade Update: 2012-07-26 23:58

EUR/AUD 4-hour Chart

Just wanted to give y’all a quick update on how this trade is doing before the week comes to a close. It has had its ups and downs, to say the least.

Since I entered the trade, EUR/AUD hasn’t really budged much. Instead of falling down to retest the previous low, the market has been content with trading sideways. And my entry was right smack in the middle of its range!

One minute, the trade would be in the money, and the next, it’d be back in the red! Talk about trading stress, bros! But luckily, the 38.2% Fib retracement level has been holding like a champ, and the market hasn’t stopped me out yet. I actually came very close to stopping out on Wednesday, but my broker’s spread kept me in the game. Phew!

New developments in the euro zone were to blame for the euro rally we witnessed the past couple of days. Still, I think these are just temporary gains. The markets have to realize that what we’ve heard from ECB officials are still just empty words. We’ll need to see concrete action to really get the euro zone out of the mud.

In any case, now, it’s starting to look as though bullishness for the euro is finally petering out. As a matter of fact, price just eased off the 38.2% Fib level and another bearish divergence has formed, this time with more recent highs. Perhaps now the sellers can take control of EUR/AUD… I’ll keep you guys posted!

Trade Idea: 2012-07-24 03:30

As I was scanning through my charts, I couldn’t help but notice this D-licious setup on EUR/AUD! There’s not one, not two, not three, but FOUR solid reasons to go short on the pair! Ironically, they all start with the letter D!

EUR/AUD 4-hour Chart

First, the pair’s been on a solid downtrend the past couple of weeks, as the euro has been straight up slumping. To put things into perspective, the pair has dropped 1,000 pips over the past three months alone! Yikes!

Second, price action has just formed double dojis on the 4-hour chart. This indicates that the recent retracement may be coming to an end as buyers are running out of steam and sellers are starting to act.

Third, we’re seeing a bearish divergence as price has registered lower highs, while Stochastic is showing higher highs.

Fourth, and probably most importantly, debt concerns are back in the spotlight. Yesterday, Spanish yields soared to as high as 7.5%. Meanwhile, there are rumors that the Troika won’t be forking over the last bailout installment to Greece as the country is now behind its debt-to-GDP and deficit targets. This doesn’t bode well for the euro, as nobody knows what may happen next.

Downtrend… Dojis… Divergence… and Debt concerns?!? Add those all up and I think the decision is pretty clear – it’s time to short this sucka!

Short EUR/AUD at market (1.1785), stop loss at 1.1850, profit target at 1.1685.

I decided to jump in at market earlier at 1.1785. The red bearish candle after the double dojis could be a sign that sellers are gearing up for another down move. I’ve set my stop above the highs of the dojis, because if price reaches that area, it could mean that we’re in for a larger retracement.

As for my profit target, I’m currently aiming for the previous lows around 1.1685. This gives me decent reward-to-risk ratio of about 1.54:1. Lastly, I’ll be risking 0.50% of my account on this trade.

Will you fellas join me on this trade?

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  • Digitalgypsy

    Nice setup bro!! Im long CADJPY so I wont be able to join you this time.  I’ll be watching your progress though 😉

    • cyclopip

      Thanks my man! Good luck on that CAD/JPY setup! 

  • mero koli

    It is privilege to find that Cyclopip trading the same setup I had found yesterday . I spot it yesterday and put my limit sell order on 38.2% fibo level my trade get triggered at 1.1820 .. sweet yea … but don’t you think the stop loss is too tight since tomorrow data of CPI in Australia will be released and the pair may have some volatility at the release specially if the data is lower than expected and that may open door for other rate cut

    • cyclopip

      It’s possible, but I figured that if price reaches that much higher than the double dojis, it may signal a stronger move up. In any case, I’ve only risked .50% of my account, so if I do get stopped out, it won’t hurt too much! 

  • Fx-megaforex

    I already open a short position with the EURAUD I analyze the currencies by the trend, I try to trade the strong trends currencies with the weak trend currencies, and thats how I open the short position of the EURAUD. Will see if we are right in this one. 

    • cyclopip

      Euro is pretty weak right now and let’s see if that continues this week! Good luck to both of us! 

  • Booster85

    Seems this went really well… to bad im such a beginner that i by mistake choose long instead of short… ops

  • Alessiovillari

    Well this trade did not go well. EUR/AUD reached the stop loss value and we got kicked out.

    • cyclopip

      I’m actually still in the trade as my stop loss order was a “Stop if Bid” order. Quite lucky to be honest! 

  • Fx-megaforex

    I also trade the EURCAD based on my own analysis and I also was kick out by the stop loss 🙁

    • cyclopip

      I feel you, bro. What could you have done differently?

  • SammyW

    I was waiting for a pull back on this since the middle of the week prior.  After price began to head south again I entered and put my stop just above the pull back. Then next day I was stopped out!  I stayed out of the market the rest of the week waiting for another chance to enter.  I think a clear move down will provide a high probablity trade with decent R to R.

    • cyclopip

       Were you able to reenter? The market finally made its move down, just a bit later than when we expected!

  • JJ6845616

    Hard luck for u Cyclopip.The price just hit your stop loss and reversed .Looks like it made your stop loss a “universal resistance”.I can feel your pain.

    • cyclopip

       Yep! Seeing that happen was definitely a tough pill to swallow. I should’ve moved my stop to break even when price found support at 1.1750 again! Drats. Hope you had better luck, mate!

      • JJ6845616

        Yupp i am still holding short at EUR/AUD.I have planned to take profit at 1.1650.

        • cyclopip

           Nice! What’s your reward-to-risk ratio on that?

          • JJ6845616

            The price touched 1.1850 two times.I shorted at 1.1845 with SL 1.1900 and take profit 1.1650 so my risk-reward ratio on this trade is purely 1:4.Now i have moved my stop loss to 1.1720.I hope this trade would touch my take profit.