Thanks to recent developments with China’s currency, GBP/AUD took off like a rocket on broad Aussie weakness-enough to hit my profit target & close my forex trade! Here’s a quick review.
Original Trade Idea: Forex Trade Idea: Long GBP/AUD
For a minute, the situation looked worrisome, but GBP/AUD managed to draw in buyers thanks to this week’s big story: China devaluing its currency–twice! China’s actions raises the fear and uncertainty of the global economy, bringing in a round of selling in risk assets like commodity currencies. And between Sterling and Aussie, that meant the Aussie was going down. The move was strong enough to quickly push the pair up from the 200SMA to the previous swing high, where my take profit orders at 2.015 were triggered and closed out my trade:
Total: +400 pips/ +0.25% gain
So, a nice gain, but I am kinda kicking myself for not adding to the position when the 200 SMA was tested around 2.0900. But at the time, Sterling was getting beat so I thought adding wouldn’t be a great idea given the situation. With the pair turning lower on today’s session, I will continue to watch that 200 SMA level to see if buyers will take control again, and look to play another long trade if the story remains bearish on the Aussie. Stay tuned!