Closed Open Orders: 2011-09-22 8:22 ET
Good morning fellow forex fanatics! And what a fanatical day it’s been in for forex over the past 24 hours. I tried getting into that super risk off move after the FOMC announcement, but it looks like that train wasn’t waiting for no one. Check it!
Before you move on, for those who are not familiar with my framework, signals, setups, or acronyms, please visit my discretionary trading framework blog.
As we can see in the chart above, there was no looking back for Dollar bulls. The only time the pair took a breather was understandably at parity (1.0000), but that was very short lived. So, after the 200 pip break to the downside, it’s probably safe to say I’m not going to get in AUD/USD short at the price I’d like. I closed my open orders at 1.0175; no trade.
In hindsight, the better play was to scale into the move with small positions, but everything is always easier in hindsight. There was the uncertainty if we’d see profit taking or if parity would bring in buyers, but that’s the challenge of trading: making hard decisions in an uncertain world everyday–and I love it!
Moving forward, I look to hang back now that Asia and Europe have had a chance to lay their bet down. The risk aversion move may slow down here (or even reverse), but we’ll just have to wait and see everything open up before we find out. As always, stay tuned on my Twitter and Facebook pages as I like to call out setups as I see’em. Good luck and good trading!
Trade Idea: 2011-09-21 17:49 ET
What a day in the markets, right? The FOMC comes out with its interest statement and “Operation Twist” as expected, and traders took it as an opportunity to buy up some Greenbacks! Is this a breakout to jump on or simply a fakeout?
Since my homegirl Happypip is working her comdoll expertise on her USD/CAD trade, I think she wouldn’t mind if I used AUD/USD to play the recent turn of events in the Greenback. On the chart above, we can see that the pair was in rangebound mode all of last week and part of this week, and with the help of today’s FOMC statement, the Greenback rallied across the board on risk aversion and AUD/USD broke out of its consolidation. The pair has been in a downtrend since toping out at the beginning of the month from a high around 1.0760, so it makes sense to stay with the trend.
I’m gonna be conservative on this one and wait for a potential retest, and if we see one I’ll go short on a retest of last week’s low (1.0175). My stop will be above the FOMC news candle and my target will be the super major, psychological level of 1.0000, giving me a potential return-on-risk of 2.5:1!
Short AUD/USD at 1.0175, stop at 1.0245, pt at 1.0000
Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.
For the rest of the week, there’s no major data set for release from Australia or the US on the forex calendar, so sentiment and technicals may prove dominant on price action in the short term. Of course, in this environment I won’t stay married to a trade, so if I make any fast adjustments then I’ll be sure to let ya know on my Twitter and Facebook pages. Stay tuned and good luck!