AUD/USD: Shorting at a Retracement – 100 Pips in the Bag!

Trade Closed: 2011-11-09 8:31

OH… MY… GOD. AUD/USD must be showing me who’s really boss because it decided to drop all the way down to my original target near 1.0200 just after I closed my position. But hey, I’m not complaining about my 100-pip win!

Just a few minutes after I moved my profit target to 1.0300, thinking that the AUD/USD range would hold, news of Italian bonds yields spiking to 7.4% hit the airwaves and triggered a fresh round of market panic.

You see, the 7% mark is the euro zone’s threshold for countries seeking bailouts, such as Portugal and Ireland. Speculations that Italy would have to yield to the inevitable bailout forced the euro, as well as the higher-yielding currencies, to tumble. With that, AUD/USD breached support at 1.0300 and made me regret adjusting my profit target.

Then again, no one ever got hurt by taking a profit, right? Here’s how it all turned out:

P/L: +100 pips / +0.6%

Not to shabby for my “favorite” pair! Is it safe to say that my AUD/USD curse is broken? Let me know what you think!

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On to the next setup!

Happy time

Trade Adjustments: 2011-11-09 4:39

After days of keeping my AUD/USD trade open, I’m now wondering if I should close my position.

Fundamentally, the prospect of Berlusconi’s resignation and the rise of commodity prices are propping up risk appetite in markets. On the other hand, recent economic reports like Australia’s trade balance and China’s inflation numbers are pointing to a weaker Australian economy.

AUD/USD Adjusted Stop and Target

On the technical side of the trade, it looks like AUD/USD is safely fenced by the 1.0300 and 1.0400 psychological levels. In fact, I almost got stopped out a while ago if it weren’t for the spread!

Anyway, since the pair doesn’t look like it will reach my original profit level soon, I decided to move my stop to break even and adjust my PT to 1.0300 if it retests the level. That way I’ll be taking advantage of another setup even though it wasn’t the one I originally planned.

Here are my new trade details:

Entry at 1.0400, SL now moved to break-even (1.0400), PT at 1.0300

What do you think? Should I wait till price hits any of these levels, or should I close my trade now?

Thanks in advance for those who could help! You can contact me through the comment box or on one of the pages listed below.

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Chips, dips, and let’s get those pips!

Happy time

Trade Update: 2011-11-04 01:47:00
Aaand I’m in! AUD/USD had a topsy-turvy couple of days after I posted my short trade idea so I made some adjustments to my setup. For one thing, AUD/USD made a new low near the 1.0200 area the other day and I thought I missed another great setup.

But lo and behold! The pair’s slide was cut short when Greece canceled its referendum, causing risk appetite to surge. Since I was still bearish on the Aussie owing to the recent RBA rate cut, I decided to adjust my Fibs to look for a better short entry.

AUD/USD Retracement Entry

As my luck would have it, a neat little doji formed right at the 38.2% Fib retracement level on the 4-hour time frame. To top it off, that’s closely in line with the 1.0400 major psychological level and the previous day high.

Since I based my short entry on the candlesticks, I decided to play it tight and set my stop just above the 1.0450 minor psychological resistance and the 50% Fib. That means once the next candles close above the doji, the reversal candlestick would be invalidated and I’d be able to jump ship. If the trade goes my way, however, I’ll be aiming for the recent lows near 1.0200 as my first profit target.

Here are my adjusted trade details:

Short AUD/USD at 1.0400, stop loss at 1.0480, first pt at 1.0210.

I’m risking 0.5% of my account on this trade and I plan to close half my position at 1.0200. I’ll also move my stop to my entry then and trail it if price keeps going down.

Do you think this trade could lift my AUD/USD curse? Should I change anything with my stops and targets? Speak now or forever hold your peace!

I’m kidding, of course. But do feel free to holler at me through the comment box below!

Trade Idea: 2011-11-02 06:49:00
Yipes, where did the last 10 months go?! It’s the start of another month and you know what that means – a fresh start at bagging some pips! Will I be lucky at trading AUD/USD this week?

As we all know, AUD/USD had been enjoying a strong rally for the past couple of weeks on optimism in the euro region. But now that many traders are expressing doubts on the effectiveness of the European leaders’ plans, the worse-than-expected economic reports from Australia and even China are coming back to haunt the Aussie.

Wasn’t it just yesterday when AUD/USD plunged after the RBA cut its interest rates? Apparently, the central bank thinks that the current inflation rate is close to the target with the high value of the Australian dollar and the subdued demand for its exports moderating it.

Of course, it also doesn’t help that Australia’s building approvals dropped by a ginormous 13.6% in September. Lastly, the weak Chinese HSBC manufacturing PMI turned out bearish for the Aussie since China is one of Australia’s largest trading partners.

AUD/USD Retracement Play

On the technical side of the trade, I’m looking at a potential retracement to the 61.8% Fib on the 1-hour chart. Aside from a previous resistance at the 1.0500 area, the pair could also form a head and shoulders pattern if the Fib level holds. What’s more, the 1.0480 area is also a candidate for a support-turned-resistance at a broken rising trendline!

I’m not planning on entering an order just yet though. As tempting as the setup is, I will try to get a signal from the FOMC minutes coming up in a few hours before I enter any trade. I learned from my last USD/CAD trade, you see. In an environment where risk sentiment switches faster than Kim Kardashian can file for divorce, I think I can do without the possible volatility of the FOMC minutes.

But what do you think of my setup so far? Does it have a chance at gaining some pips? Hit me up on one of the pages below if you have any ideas on how I can tweak my trading plan!

@Happy_pip Twitter
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Chips, dips, and let’s get those pips!

Happy time

  • Mario

    Oh Yeah! Nicely done!!! :D

  • Facebook Covers

    Thanks for update.

  • Pricehcm

    My system is based on cycles and trends.. I absolutely don’t believe in the news making the price, rather its the opposite. There are short term cycles and trends and, also long term cycles & trends. My short term trades tend to stay a few days and the long term trades about a month or so. Based on this my system identifies the trend of any pair, gold,silver, crude, futures etc.. subscribe to my blog by adding your email at the bottom of the page. Blog will be updated every other day, Since there is no need of listening to market noise every second.http://cyclestrendsprice.blogspot.com…

  • Mario

    Hello HappyPip,

    I never thought you would follow my advice about using candlestick pattern in your setup.. I’m with you on this one! :)

    Good Luck!
    Mario

    • happypip

      Cool! Are you in already? What price did you enter? I’m telling you, I really take advices seriously :))

      If I win this one I owe you a big high five! Haha :D

  • Foricks

    I hope you had a slow trigger finger on this one, Happy…AUD dropped right about the time you hit the “post” button. 
    Plan the trade/trade the plan.

  • EL Dorado

    One advice, never trade based on news or fundamentals :) The market IS , and thats it.

    I can understand your trade but imo I think be have a short term bottom at 1.02 , On the 4H chart prices broke the 20MA , they are retesting/following the descending 20MA for the moment but keeping in mind that we are still above it I think we can expect another leg up.

    Another reason for my opinion of the short term bottom at 1.02. Look at the bullish divergence on the RSI when we hit 1.02 , RSI was higher then at the 1.025 low. Bullish sign.

    So all in all , I’m bullish for the short term :) But not in the pair for the moment :)

    Good luck anyway and lets hope ( for real :p ) that I was wrong.

    Grtz,

    EL D 

    • happypip

      Thanks a lot for the tips, EL Dorado.

      I think I know about the 1.0200 support you were talking about. I’m still beating myself up for not taking the setup, actually. Must be my fundamental bias. Depending on the events over the weekend I might move my stop to break even early or take profits at 1.0300, but if I decide to keep it open I’ll also watch out for the 1.0200 handle you pointed out.

      Happy weekend, friend! :)

  • Kioniboy84

    i like your trade idea, im in! i think this pair has risen alot and could do with some retracement, i got in at 1.038, first tp at 1.300, will see from there :)

    • happypip

      Nice entry!

      Hope you didn’t get stopped out by the NFP spike. Looks like you’re in the green for now, huh? I’m thinking of moving my stop to BE at 1.0300 and even adding to my position. I’m not sure yet…

  • Foricks

    Hey Happy,
    I think you know I am long-term bullish on this pair (and love the carry trade).  I am seeing a different story on the 4 hour stochastic.  It seems to be breaking above the 30% level.  I am in until 1.0850 TP right now.
    Fundamentally, euro contageon is keeping the USd in check as well.  The only thing that can shoot my trade in the foot (and help your trade) is if Helecopter Ben hints of QE3.  Good for US stocks and, for whatever reason, good for USD.
    Cheers,
    Foricks

    • happypip

      Yeah, I see what you’re saying. The technicals on the longer-term time frames are hinting at an AUD/USD rally, I just can’t seem to find the fundamentals to back it up.

      In the meantime though, it looks like I missed out on this potential AUD/USD short. Just trying to ride the wave after their rate cut and the Greek referendum. On to the next setup then!

      Oh, best of luck on your trade btw! :)

      • Foricks

        Thanks Happy.
        I know what you mean about missing out on potential trades.  I sat there at 3am with my finger on the buy button to add more to this trade around 1.0225 (remember I was supposed to buy at 1.0205, but entered the wrong pair).  Figured I would sleep on it as I did not have a nice reversal pattern on the 4hour.  Not sure if 4 hours of sleep was worth missing a 200 pip run.  D’oh!  Get em next time.