My trade started out pretty well after it got triggered. Many of our trader friends suspect that a pullback was only natural after the huge selloff in high-yielding assets early this week, so I didn’t panic much when AUD/USD reached my entry at 1.0650 and lingered there for most of the London session.
Unfortunately, the Fed’s Big Ben shocked the markets with his speech yesterday, and no, it wasn’t because his beard was whiter than ever. Apparently, he not only said that economic growth was weaker than the Fed had originally thought, but he also hinted at more economic stimulus in the future! Eep! And I thought watching the very last Harry Potter movie was already sad enough!
In any case, Bernanke’s news was enough to get the dollar bears busy as they drove the dollar sharply lower against the high-yielding comdolls. I got stopped out even when I was watching the trade closely! Maybe my fingers just weren’t fast enough.
Though my happy vibes are taking a huge hit from both the losing trade and the prospect of saying au revoir to Harry Potter, I still give happy snaps at the way I and some of my Facebook friends took the risky trade. After all, there was a really good technical setup, which, at the time, was also supported by fundamentals.
Don’t hesitate to join my friends sharing their thoughts through the comments below or even on one of my Comdoll Corners!
See ya there!
Trade Idea: 2011-07-13 7:22
Even though I took a small hit on my last AUD/USD trade, I’m giving this pair one more shot. Everyone deserves another chance, right?
Risk still seems to be off in the markets as we saw plenty of red figures on the economic calendar yesterday. Although most of the weak reports came from the U.K. and the U.S., Australia had its own share of poor data as its NAB business confidence index slipped from 6 to 0 in June.
Fresh off the press today is the Westpac consumer sentiment index, which showed that individuals grew more pessimistic about their economy. Why the long faces, Aussies? That can’t be good for the Australian economy!
This is why I decided to maintain my bearish bias on the Aussie. Aside from that, I also noticed that gold is inching really close to its previous highs, which could act as resistance. With that gold-AUD correlation that I learned from the School of Pipsology, I’m thinking the Aussie could also fall back if the resistance on gold holds.
As for the technicals, AUD/USD itself also approached a nice resistance level around 1.0650. This coincides with the 50% Fibonacci retracement level and also a former support level from the past couple of weeks. Oh, and it’s forming a nice bearish divergence on the 1-hour chart, too!
I’m also seeing a sort of rising wedge, which is usually leads to a downside breakout. If that happens, I’ll be aiming for the previous lows around the 1.0550 level. I set my stop at 1.0750, which is a hundred pips away from my short order at 1.0650.
In short, here are the trade details:
If you wanna jump in the same trade, better watch out for Fed head Bernanke’s speech during the U.S. session. I’ll be keeping my eyes glued to the tube around 2:00 pm GMT to see whether he’ll talk about the possibility of QE3.
If he admits that the Fed needs to dole out more stimulus for the U.S. economy, I just might close my trade early knowing how this could lead to a strong U.S. dollar selloff. But if he merely points out the weaknesses in the U.S. economy and remains mum about QE3 (or dismisses that possibility entirely), I’ll be holding on to my short AUD/USD trade and praying that risk aversion will do its magic.
Speaking of magic, are you all ready for Harry Potter: The Deathly Hallows Part II? I hear that the “end of an era” craze is making kids and adults alike look forward to the movie like it’s Christmas!
Anyway, what do you think of my trade? Will I succeed in my gazillionth attempt to trade AUD/USD? Don’t be afraid to share your two cents! Whether it’s a trade idea, an opinion, or even a Harry Potter fangirl/fanboy comment, I will greatly appreciate it!
You can give me a shoutout on the box below, my Twitter or Facebook accounts, or even one of my Comdoll Corners I made just for you! Meanwhile, I gotta find my nephews some really cool-looking Harry Potter costume. They’re really excited about the movie!
Looking forward to hearing your thoughts!