Trade Closed: 2013-05-09 00:24
Just when I thought that the RBA’s rate cut would be enough to drag the pair to new lows below 1.0200, a positive report came out!
As we saw yesterday AUD/USD dropped below its 1.0200 major support area after the RBA surprisingly cut its rates. It also didn’t help that there were rumors that finance genius George Soros dropped a billion to short the Aussie.
Unfortunately for my trade, China printed a stronger-than-expected trade balance data. AUD/USD didn’t quite rally at the release, but it was enough to reach my adjusted stop loss at 1.0200. But hey, at least I didn’t lose anything, right? It was a good breakout trade idea at the time.
How about you? Did you have better luck at trading the Aussie this week? Don’t hesitate to share!
Trade Idea: 2013-05-07 3:24
Surprise, surprise! The RBA just cut interest rates by 0.25% in today’s Asian session, bringing their benchmark rate to 2.75%. Of course AUD/USD plummeted below 1.0200 right after the announcement, but there could still be a chance to catch a pullback then short at a better price.
Based on previous price reactions to interest rate cuts from the RBA, the selloff tends to continue into the later trading sessions for the day. However, price also tends to retrace to major or minor psychological levels before resuming its drop. For today, it seems like the 1.0200 major psychological support is a good place to hop in the downtrend.
I set a wide 100-pip stop above the previous consolidation in case price makes a larger retracement, but my hunch is that European and American traders have yet to react to the recent rate cut. And with higher liquidity in the later sessions, AUD/USD could be in for a stronger move down south.
I will be moving my stop to entry once price breaks below the day’s lows. On top of that, I will be keeping a close eye on the Australian jobs release later on this week as this could also have a huge effect on AUD/USD movement.
Here are my trade details:
Short AUD/USD at 1.0200, stop loss at 1.0300, profit target at parity. My profit target is still subject to adjustment, depending on how Australian data turns out. I risked 0.5% of my account on this trade.
Do you think AUD/USD will keep selling off today? As always, I’d love to see your feedback on my trade ideas!
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