AUD/USD Short: RBA Rate Cut – Stopped out at BE!

Trade Closed: 2013-05-09 00:24

What selloff?

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!

AUDUSD Trade Closed

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.

AUDUSD Trade Idea

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!

Happy time

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  • Bijoymj

    I doubt. The long term range between 1.0150 and 1.0600 as shown in chart is keeping me away from joining this party.

    • Guest

      True words.

    • happypip

      Nice chart! Are you planning to buy at 1.0150 then? 🙂

      • Bijoymj

        I will wait for some more confirmation, before going long. Want to see a breakout as shown below. Planning to enter somewhere around 1.0250 after a break out. Target will be 250 pips.

  • TLTrader

    RBA rate cut did tank AUDUSD. However, the range expansion is really happening in USDJPY which is somewhat surprising to me.

    • happypip

      I think it has something to do with a rally in Japanese equities. They’re gonna need more yen if the rally continues!

  • Jason

    3o pips in my sleep! Thanks Happy Pip!

    • happypip

      You’re welcome! Are you planning to enter another Aussie trade this week? 🙂

      • Jason

        I only have today and tomorrow left to trade this week but I’m open to another trade. It looks like the Aussie is hitting resistance on the D1 chart.

  • bashar

    finally u decide to short aud.usd…. i told u that from ages 😉

    • happypip

      LOL. Thanks for the tip!

      • bashar

        am shorting since 1.05

        gonna take profit at 1.0115

        while i still think 1.0020 is insight….

        long term… break out of channel…. and channel duplication …. give it some months n u will see 0.98 😀

        • bashar

          but the problem is ….
          one good friend once told me : ” u should buy eur/usd when Taxi drivers telling u to sell it…”

          now everyone is shorting aud/usd… n i dont like that….

          lol!

  • bashar

    am still waiting for the hard crash here

  • bashar

    who was talking about a hard crash here? 😛

  • Foricks

    Are you ready to go long with me on the AUD/USD? Check out the resistance at the 200 MA coinciding with a support from 10/11 and 5/12 on the daily. You know how I love the carry trade…This is my addiction – worse than your chocolate cake, LOL!