AUD/USD: Shorting at a Retracement – Trade Closed

Trade Update: 2013-08-12 3:25
Not again! Just when it seemed like the odds were lined up in favor of my short AUD/USD trade, the pair ignored weak Australian fundamentals and busted through the resistance levels. As you can see from the chart below, AUD/USD jumped right past the .9100 level and went all the way up to .9200, hitting my stop along the way!

AUD/USD Trade Update

I’m pretty disappointed with how this trade turned out as it extended my losing streak, so I hope you’ll be able to bear with me in my little rant right here… Does the Aussie no longer care about fundamentals at all?! Australia printed a flat retail sales reading, a poor trade balance report, and a 10.2K drop in hiring. The RBA even cut interest rates and remarked that the Australian dollar is still overvalued. To top it off, China printed weaker than expected trade balance and CPI figures…. and yet AUD/USD rallied by 300 pips for the week!

Whew, rant over. Now that I’ve gotten it all out, I think it’s time for me to clear my head and regroup my thoughts. It appears that dollar weakness was the dominant theme for the previous week, as risk appetite improved after several major economies posted notable improvements. Perhaps traders have gotten so accustomed to seeing bleak figures that even small improvements in medium-tier reports, such as Chinese industrial production, were enough to renew hopes that an economic recovery is underway.

I’ll definitely keep this in mind for this week’s trading, although the tides could still shift depending on US reports. I’m pretty sure the September taper theme could come up again so I’ll be on my toes at all times!

Got any setups you’d like to suggest for me? I could really use your help in getting out of this trading rut!

Trade Update: 2013-08-08 6:40

After waiting for Australia’s major reports, I’m finally taking a side!

Unless you were too preoccupied with Mark Carney and the Fed, you should know that Australia had printed a surprisingly weak retail sales data and trade balance numbers. Not only that, but the RBA had also cut its rates by 0.25%!

AUD/USD Trade Update

A few hours ago I saw what I needed to enter a short. Australia showed that 10,000 workers lost their jobs for the month of July. This kept the country’s unemployment rate at 5.7%, a high not seen in almost four years, despite the decrease in participation rate from 65.3% to 65.1%. Then, China also added to the bad vibes when it printed a slightly weaker-than-expected trade surplus.

With the weak Australian reports all over the markets and the Chinese economy continuing to show spots of weaknesses, I’m selling AUD/USD. I’m planning to do it at the .9100 major psychological handle, near the 100 and 200 SMAs and the 61.8% Fib on the 4-hour chart.

Here’s my plan:

Sell at .9100 with a 60-pip stop (above the Fibs and the SMAs) and place my initial profit target at .9000. If my orders get triggered, then I might place my stop loss to break even or even close ahead of the weekend.

What do you think? Can you think of revisions that could improve this trade?

Trade Idea: 2013-08-06 7:48

Looks like the Aussie bulls are taking the latest RBA interest rate decision in stride!

A couple of hours ago, the RBA decided to cut its rates by another 0.25% down to 2.50% and stated that the Australian economy could grow below trend in the near term as income from mining operations took a hit. Aside from that, the central bank also reminded us that there’s plenty of room for another rate cut if we look at Australia’s inflation numbers.

Interestingly, the Aussie rallied in reaction to the rate cut. Before you say “What the heck?!” like I did, you should take note that a lot of traders had already expected a rate cut and that we might have seen a sell-the-rumor-buy-the-news phenomenon.

AUD/USD Trade Idea

With that, I’m planning to sell AUD/USD around the .9000 to .9050 area as it’s near the top weekly ATR that we had marked in our Comdoll Trading Kit. It’s also conveniently near a previously strong support as well as Fib areas on the 4-hour chart. I’m thinking of using a ½ WATR stop and aiming for the previous low.

What do you think? Is this something that you would take?

Happy time

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