Trading the AUD/CAD Trend Line – Time to Close Shop

Trade Closed: 2013-08-27 00:55

I survived one fake break above the trend line, but now that price action is getting choppy, I think it’s time to sit down and think of what to do with this trade.

AUD/CAD Chart

The Canadian dollar has been the main source of volatility on this pair, as a rise in USD/CAD has caused the CAD to lose ground against other major counterparts as well. This had helped AUD/CAD break back above the falling trend line, which is more than a little scary for my trade.

Looking at the chart above, we see that while price is finding resistance at around the .9500 MaPs, it’s getting rather choppy. I think this could be a sign that the falling trend line isn’t as powerful as it was in June and July and chances are that we’ll see price remain choppy for the rest of the week. This will most likely invalidate my trade idea, as price will be trading all over the trend line.

That said, I think it’s time to close shop and move on.

Closed AUD/USD short position at market (.9451): +19 pips / +.11%

Not quite the profits I had in mind when I first started out on this trade, but I think given the current situation, closing out ain’t such a bad thing. At the very least, I went home with a win and ended my losing streak!

For now, it’s time to look for the next trading opportunity. Good luck trading the rest of the week, my forex friends!

This is Cyclopip signing off!

Trade Update: 2013-08-21 22:20

It has been a week since I opened this trade and though it has given me a scare or two, overall, things seem to be going as planned.

AUD/CAD Chart

For a second late last week, I thought my trade was doomed! The Aussie rallied just as Canada released a couple of bad reports (manufacturing sales and foreign securities purchases), causing AUD/CAD to trade briefly above the pair’s falling trend line.

Luckily, I weathered the storm and kept my trade open because as soon as the new week began, the tides turned in my favor. The Aussie stumbled early in the week as the RBA meeting minutes revealed that the central bank is still looking to further ease monetary policy. It also mentioned weakness in the global and domestic economy, which shows that policymakers are still concerned for Australia’s future.

It appears as though this is enough to keep AUD/CAD below the trend line, so I’m staying in this trade for now. I’ll let you know if I make any changes to my trade. Hang tight, folks, and make sure you follow me on Facebook and Twitter!

Trade Idea: 2013-08-14 23:10

Take a gander at this beauty!

AUD/CAD Chart

AUD/CAD has been drifting lower and lower since mid-June, and it’s been sporting this nifty little descending channel since then. As you can see, sellers have been in control for majority of the last two months. But after finding support at .9200, the market has turned up and looks to be pushing higher.

Methinks this might actually be the perfect opportunity to sell the pair, especially since it’s now testing the falling trend line.

As far as I’m concerned, not a thing has changed for the Australian dollar in terms of fundamentals. Australia is still struggling economically, and the RBA is still expected to lower interest rates further this year. I think this should, at least in the long run, keep selling pressure on the Aussie.

Here’s how I set up my trade:

Sold AUD/CAD at market (.9470), stop loss at .9560, profit target at .9200. Risking 0.5%.

I’m setting my stop just above the last swing high, which would require a very strong break of the falling trend line. And as for my profit target, I’m swinging for the fences and targeting the former low at .9200.

If all goes according to plan, I will be taking home a solid return on risk of 4.5:1. That alone is worth the risk, in my opinion!

What do you guys think? Will this trend stay intact?