Trade Canceled: 2013-02-08 3:00
So much for a retracement!
Instead of taking a breather all the way to a possible retracement at 1.0400, AUD/USD went on its merry way south without hitting my entry orders. Boo!
Apparently, Draghi‘s belief that the currency’s strength should reflect its fundamentals was enough to send the currency bulls on a retreat in favor of the dollar. The Aussie didn’t escape the flight to safety, especially since Australia’s fresh unemployment numbers showed that more workers are giving up trying to find jobs.
I honestly don’t know how I should feel about this trade just yet. I probably should have entered at a lower price if I really wanted to jump in the downtrend. But where could I have entered that would have given me a good reward-to-risk ratio? Got any ideas?
Right now I’m patting myself on the back for at least getting the direction right and not entering a trade impulsively when AUD/USD was starting to make new lows. On my next trades I’ll work on having multiple entry levels and having plan Bs.
Hope you have a good weekend, guys!
Trade Idea: 2013-02-07 7:30
My, my! Things aren’t looking to bright for the Aussie these days and I’m seeing a bunch of technical and fundamental reasons to short this pair. As you can see from the chart below, the pair formed a double top pattern last month and now appears to be breaking below the neckline.
I’m waiting for a quick pullback for my entry though, as the 1.0400 major psychological handle lines up with the 38.2% Fib and the broken trend line on the 4-hour time frame.
As for fundamentals, traders don’t seem to be willing to give the Aussie any lovin’ as the RBA just hinted that a rate cut might be in the cards for their March statement. Top that off with a weak retail sales figure and a not-so-promising jobs figure, and we’ve got a recipe for a potential selloff!
I’ll be setting my stop above this week’s top WATR, which I noted in my Comdoll Trading Kit. This should give my trade a 75-pip leeway in case risk is on during today’s London and New York sessions or if China’s upcoming trade balance report comes in stronger than expected. I’m inclined to think that strong Chinese reports don’t usually have that much of an impact on AUD/USD these days as the pair barely reacted to the upbeat Chinese PMI earlier this week!
Here are the trade details:
Short AUD/USD at 1.0400, stop loss at 1.0475, profit target at 1.0250 but I’ll move my stop to entry once the pair reaches 1.0300.
I’ll be risking my usual 0.5% on this trade so if you plan to join me, don’t forget to read our risk disclosure.
Do you think I’ll be able to catch this retracement? Who’s shorting AUD/USD too?
Chips, dips, and lots and lots of pips!
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