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.
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!
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.
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.
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.
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!
Have fun and good luck trading this week, friends!
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