Return to AUDUSD weakness? – Trade Closed

Trade Closed: 2010-02-21-21:40

PoD Chart

Good morning to all you Asia session traders and welcome back to another fabulous week of FX trading! It looks like my trade triggered and moved my way, but it looks like I couldn’t get a big enough move on this trade. Check it!

After half my position was closed at .8885 and I adjusted my stop on my remaining position to lock in some profit on Friday, the pair immediately rallied higher to close out the week just below my entry point. At the open of this week’s trading session, AUDUSD gapped higher above my adjusted stop at break even to close my remaining position out at .9005.

1st Half: +115 pips
2nd Half: – 5 pips
Total: +0.47% gain

So, another small gain locked in for the month, but in retrospect, I should have closed down my entire position at the first profit target. It was Friday, and I usually don’t like to hold positions into the weekend, but I was pretty confident the pair would continue to move lower. That’s a trading mistake as I didn’t follow my usual rules and it cost me a bit of profit. Just gotta remember in the future…”No open positions into the weekend!”

I will continue to watch AUDUSD as it retests last week’s high. If it holds and moves lower, it may be another opportunity to short the pair, especially if risk aversion creeps back into the markets. Stay tuned and thanks for checking out my blog!

Trade Idea: 2010-02-17 23:08

PoD Chart

Good evening forex junkies! I’ve been going blind staring at charts all day, but I think I’ve found a decent trade setup I’d like to take on AUDUSD. The pair is forming some technical sell signals in my view, so I think I’ll jump in. Here we go!

First, I have the four hour chart on AUDUSD and I see the pair slowly trending lower in a wide channel. Because it is trending lower, short trades may be the best bet. Using the Fibonacci tool on the swing from about .9300 to about .8600, we can see potential resistance between the 38% and 61% Fib levels (.8865 to .9042). This area has also served as a support area back in November and .9000 is a major psychological area, so it may hold as resistance.

Fundamentally, Australia seems to be the only “real” shining light in the flailing global economy, but I don’t think it will be enough to prop the Aussie up if China continues to take measures to curb lending, rising euro zone debt issues freeze credit markets, and general risk aversion sentiment continues to creep on global economic weakness. We’ve also see positive data from the US recently, which has added to broad Greenback strength.

Will this continue into the week? Well, we’ll just have to wait and see as traders may adjust risk sentiment after initial jobless claims data, Philly Fed manufacturing index, and PPI from the US today. No major data from Australia, so it may all be US data and risk sentiment driving AUDUSD for the rest of the week.

So, I’m going short on the technicals, and the view that a pullback in China and global credit issues may bring back risk aversion, and push traders out of the Aussie and into the Greenback. With stochastics just starting to indicate oversold conditions, I think we may see a retest of .9000, and if we do I will go short there. My stop will be the daily average true range (about 115 pips). and I will ultimately target just about the recent swing lows around .8600. Here’s what I am going to do:

Short AUDUSD at .9000, stop at .9115, pt1 at .8885, pt2 at .8600

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.

This is a nice risk-to-reward of over 2:1, so I like it a lot. Let’s see what happens…Stay tuned!

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6 comments

  1. haniff0

    hi

    i am with you but am selling tiny first around current
    level in case it wont climb back to 90 00.

    do you similar correlation with the nzd?
    any ideas there?

    Reply
  2. haniff0

    hi

    i am with you but am selling tiny first around current
    level in case it wont climb back to 90 00.

    do you similar correlation with the nzd?
    any ideas there?

    Reply
  3. PipcrawlerPipcrawler

    Thanks for the comments! Looks like the helped out my trade idea yesterday and my first pt has been hit…holllaaaaaa!!!

    Reply
  4. PipcrawlerPipcrawler

    Thanks for the comments! Looks like the helped out my trade idea yesterday and my first pt has been hit…holllaaaaaa!!!

    Reply

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