Forex Trade Adjustment: 2014-08-19
Good afternoon forex friends! Looks like I lucked out this time with EUR/AUD bears taking back control, but with strong support ahead, it was time to adjust.
Original Trade Idea: Shorting EUR/AUD at Previous Consolidation
EUR/AUD bears are back in the mix as European sentiment seems to be getting a bit more dire as the data continues to disappoint, and we’ve seem to come across a stretch of broad risk-on sentiment with a lack of fresh geopolitical tension headlines to support risk currencies like the Aussie.
But with the summer conditions in play, and the recently published RBA meeting minutes showing there’s concern of the Aussie being overvalued and below-trend GDP, I think the downside momentum lower may slow down a bit.
Everything is looking good so far for my EUR/AUD short idea (up almost 150 pips), but with the market hitting a potential support area I think it’s time to make a quick adjustment to lock in profits. I moved my stop to 1.4410 (just above the moving averages) because for me, if it goes above that area the trade is invalidated. I lock in a very small 40 pips profit, but I also gave it enough breathing room to work the trend in case we see volatility rise. Geopolitical risk may be out of the spotlight, but still lurks to give this trade problems, so I gotta factor that in.
As for my long NZD/CHF trade, it’s been knocked down but the bulls don’t want to give up that .7650 area, so I’m still holding for now. I’ll continue to keep a close eye on it with the NZ Dairy Auction around the corner, which has had a big negative affect on the Kiwi in recent months as prices continue to fall. If we see another bad read, I may have to close this one out quickly…stay tuned!