Looks like I was a bit too conservative with my long entry on GBP/AUD as the forex pair ripped higher this week, leaving me in the dust. Here’s a quick review.
Original Trade Idea: Forex Trade Idea: Long GBP/AUD
Not much go through here as the GBP/AUD went right into bull mode at 2.1100, possibly on the recent switch in broad risk sentiment to the downside on global growth worries. Since the Aussie is considered the “risk asset” between the two currencies, it unfortunately takes the brunt of the selling in situations like we’ve seen this week.
So, with that fundie support, buyers hopped in around the 2.1100 area (which is also just above the rising 200 moving average), pushing the pair to the strong resistance area around 2.1500. With the market now 600 pips from my entry area, I’ve decided that I missed the boat on this one and I closed my entry orders to go long at 2.0900. No trade.
I’m still bullish on this pair because of the weak commodity and risk-off sentiment, but with the market now testing that strong resistance area, the probability of a profitable trade doesn’t look great at current levels. I’ll sit back on this market to see if the rising 200 MA gets retested OR if that strong resistance area around 2.1500 gets broken before putting up orders to go long again. Stay tuned!