AUD/USD: Long or Short? – Profit Target Hit!

Trade Closed: 2012-07-27

Thank you, Mario Draghi!!!

Just when the “Nowotny relief rally” was starting to run out, ECB head Mario Draghi stepped up and fueled the Aussie bulls’ fire.

AUD/USD was happily ranging near its daily open price when Draghi went under the spotlight and announced that the ECB is ready to lend a hand in the bond markets where Spain and Italy’s yields are at unsustainable levels.

AUD/USD Trade Closed

Like many other high-yielding currencies, the Aussie rocketed by at least 100 pips against the Greenback. This brought AUD/USD to the 1.0400 major psychological handle. That’s right – it hit our profit target near the top of the rising channel! Woot! Woot!

As profitable as my trade idea was though, I have to recognize that it could’ve easily gone the other way. Draghi could’ve maintained the ECB’s stance on not actively intervening in the bond markets. Or traders could’ve faded the initial move after his speech. But for now, I’ll count myself lucky and happy. Yay!

How about you? Did Draghi’s speech make or break your trade? Don’t hesitate to share!

Have fun over the weekend, folks!

Trade Update: 2012-07-25 10:35
As I had announced in my @Happy_pip Twitter account a couple of hours ago, I bought AUD/USD at market during the early London session.

I realized that a staring contest with the charts wouldn’t be enough to help me pick a direction, let alone score a winning trade. That is why I decided to let the markets make the decision for me as I patiently waited for the London session to open in order to see whether traders are willing to show the Aussie some love or not.

Lo and behold, AUD/USD jumped up the charts the moment the bell rang! I waited for the 1-hour candle to close above the 1.0250 resistance that I marked on the chart just to make sure that the rally has legs.

AUD/USD Trade Update

I was able to enter half a position at market (1.0259) and I set another buy limit order at 1.0250 in case it dips back to that level.

I set my stop below the 1.0200 major psychological level, which is below the channel on the 4-hour chart. As for my profit target, I’ll be aiming for the 1.0400 mark but I’ll move my stop to entry once price hits the 1.0300 major psychological handle.

In short, here are my trade details:

Long AUD/USD at market (1.0259) and at 1.0250, stop loss at 1.0185, profit target at 1.0400. Move stop to break even once it reaches the 1.0350 area.

I risked 0.5% of my account on each position for a total of 1% risk on the entire trade. With a 140-pip PT and a 70-pip stop (based on average entry price), I could be looking at a potential 2-to-1 win!

Are you buying the Aussie too? Remember to read the risk disclosure if you’re planning on jumping in!

That’s it for now! Don’t hesitate to share your questions and tips, okay? You’ll never know your questions can save a forex newbie’s account!

Trade Idea: 2012-07-25 03:11
Good morning, friends!

What a crazy week for the comdolls! We’re only in the middle of the week, but the comdolls have already dropped by at least 100 pips against the Greenback!

This morning I saw a nice retracement setup on AUD/USD. The 1.0250 handle on the 1-hour chart is not only near today’s open price (1.0251), but is also near the bottom weekly ATR (1.0245) that we marked in this week’s Comdoll Trading Kit, the falling trend line, and the 50% Fib.

AUD/USD Retracement Setup

But just as I was about to jump in, I saw the 4-hour chart, which is showing us a bullish divergence right at the bottom of the channel and the 1.0200 psychological support. And the wick of the last candle isn’t improving my resolve to short either.

AUD/USD Rising Channel

Fundamentally the odds are lining up against the Aussie. The better-than-expected Chinese manufacturing data failed to sutain AUD/USD’s gains yesterday, while Australia’s inflation just came in at its 13-year low, raising rate cut speculations.

Concerns on Spain and Italy are still causing headaches for currency bulls. Not only that, but it also looks like traders are paring their QE3 bets as a report circulated that the Fed won’t be pulling the QE trigger at least until September.

On the other hand, some say that traders have already priced in a full scale bailout for Spain. And then there’s gold, which has benefited from the flight to safety. And we know how the Aussie’s price action is tied to gold!

I’ll probably wait for more news before I settle on a direction, but for now I’m on a wait-and-see mode.

How about you? Which direction do you think will AUD/USD go for the rest of the week?You know where to reach me!

@Happy_pip Twitter
Playing with Comdolls Facebook page
Happy Pip Comdoll Corners
MeetPips.com

Have fun and good luck trading this week, friends!

Happy time

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44 comments

    • Happy Piphappypip Post author

      Cool! Yep, I entered at market (1.0259) a couple of hours back. Where were you able to enter? :)

      Reply
    • Happy Piphappypip Post author

      Eep, thanks for the warning! I’ll keep my eye on that level and I’ll adjust my stop again if necessary. See you around!

      Reply
  1. highspeculation

    Hi Happy,

    Looks like your $AUDUSD trade has worked out very well! Currently trading just above $1.0310.

    Well done!

    Reply
    • Jamessheppard1985

      Just starting to stall a bit now, dropped 26 pips in the last hour or so. I see there is NZD RBNZ Rate Statement annouced at 10pm UK time.  This could have a slight impact on this trade to…hopefuly for the better

      Reply
  2. Vale Ducati

    I went long too but fundamental made me nervous that it can’t hit my profit target, so I just set a 40 pip trailing stop

    Reply
    • Happy Piphappypip Post author

      I was actually thinking of placing a trailing stop myself! But I decided to move it manually instead since that method has worked better for me before. Still in this trade with me? 

      Reply
      • Vale Ducati

         Sure, I’m still in trade with you, but I’ll close my running profit soon if there’s a negativ sentiment in European session today

        Reply
  3. Jamessheppard1985

    Its interesting that price is now reaching the top of the 4H channel.  Time to go against the trend and short or not?

    Reply
    • Happy Piphappypip Post author

      Yep! Looks like the top is holding as resistance for now, but I’ll have to check if fundamentals line up for a short first. What do you think?

      Reply
      • Jamessheppard1985

        Yes it does seem to be holding but like you say I am not 100% sure it is a good trade fundamentaly.  Saying that, I do clas myself as a technical trader so if there is some clear bearish price ation I may place a small trade with a tightish stop. Lets see what happens!

        Reply
        • Happy Piphappypip Post author

          Did you enter already? I just realized it’s deeply overbought across almost all time frames! I wonder when this rally would end…

          Reply
          • Jamessheppard1985

            No luckily i did not enter. I am still undecided in which way price will go.  I am going to be prepared for both as price is still around the top of the H4 channel. What is your take now? Still looking for a long?

  4. Jamessheppard1985

    Yeh i have just changed stop to break even as I am not 100% sure.  Also had a small trade on AUD/JPY which doen the same with as not sure about AUD strength continuing (hope im wrong though!!).

    Reply
    • Happy Piphappypip Post author

      Well, none of us can ever be 100% sure about anything. But as long as your analysis says that the odds are with you, then your trades might turn out to be profitable. Good luck to both of us!

      Reply
    • Happy Piphappypip Post author

      Good advice! That’s what I did with this trade and so far it’s working out well for me. Fingers crossed! Did you buy AUD/USD too? :)

      Reply
  5. Jamessheppard1985

    Well done! Thanks to Draghi you hit your target.  I must admit mine was slightly less than yours but still made over 100 pips so im happy!

    Reply
    • Happy Piphappypip Post author

      Yep! I must admit, I also could’ve made more by jumping in earlier and holding on, but we should be happy that we caught majority of the move, right? Congratulations to you, too! 

      Reply
  6. Fx-megaforex

    Great analysis, I personally trade by analyzing the trend. I look for the strongest trend currency and the weakest trend currency, and so far the AUD has been really strong against all currencies. Good job Happy Pip keep up the good work!

    Reply
  7. Teddyj0406

    Personally I trade based on technicals alone. I have come to find that we are not economists, and therefore cannot predict the future effects of news releases. In fact, the only news that has affected my trading whatsoever is NFP and the crash of the euro. Other than that I trade price action alone, and it almost always works, no matter what the news is.

    Reply
    • Happy Piphappypip Post author

      Great point about not being able to accurately predict impact of news releases. So did you buy AUD/USD based on the rising channel, or are you holding other positions? :)

      Reply

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