AUD/USD: Trading the Aussie Rally – Trade Closed

Trade Update: 2011-10-18 7:13
And my AUD/USD curse is still on! Even though AUD/USD was able to make a strong rally before the week closed, I wasn’t able to bag any pips because I got stopped out early on. Here’s what happened…

You see, it did take a lot of guts for me to jump the gun and buy at market when I saw that price was breaking above 1.0200. I decided to put a tighter-than-usual 70-pip stop on the trade since it was a breakout play anyway. Woe is me, that breakout turned out to be a fakeout!

AUD/USD Trade Update

Price pulled back just above the 1.0100 handle towards the middle of the day as Aussie bulls grew a bit exhausted from all the risk rallies. Come to think of it, AUD/USD has been gaining nonstop for the entire week. Had I widened my stop a little, probably to a hundred pips or so, I could’ve stayed in the move and locked in some pips at the 1.0300 area for a 1:1 return on risk on my first position.

Sadly, it didn’t turn out that way and I’m left with another 0.5% dent on my account. Do you guys have any tips on how I can improve my trading? I already listed my trading strategies in an earlier blog post and I was wondering if there was anything I could add. Help me out please!

You can give me a shoutout through any of these accounts:

@Happy_pip Twitter
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Chips, dips, and gimme those pips!

Happy time

Trade Update: 2011-10-13 6:33

This is it, my friends! I finally chose a direction and bought AUD/USD!

Since the FOMC didn’t turn out to be a market mover, I concentrated on the economic reports released from Australia a couple of hours ago. Not only did Australia’s employment numbers come in better than expected, the unemployment rate even surprised to the upside at 5.2% from August’s 5.3%!

AUD/USD Trade Update

For the technical side of the trade, I’m looking for a break in the 1.0200 resistance that has been holding for most of the day. A while ago when the pair looked like it was breaking a bullish pennant so I decided to buy at market.

And just like what Dr. Pipslow has been preaching, I probably should’ve been patient and waited for a better entry price. Apparently, the ECB’s expectations of a VERY moderate regional growth is taking its toll in markets. In addition, traders are also starting to pay attention to China’s weaker-than-expected trade balance data released last night.

In any case, I set my stop at 1.0150, just below the Asian session lows and I set my profit target at 1.0500. I’m also worried about the 1.0250 handle posing as resistance since it’s near the top DATR, so I plan on placing my stop to break even as soon as it reaches the area.

What do you think of my trade idea? Has the pair rallied enough in the past couple of hours, or are we just seeing a pause? Oh, and can you suggest any tweaks I can make with my trading plan?

Trade Idea: 2011-10-12 7:38

With AUD/USD just breaking parity, I’m thinking that the upcoming FOMC minutes release will be a good catalyst for either a bounce or a clean break.

That’s why I’m so excited to take a peek at the minutes of their latest monetary policy meeting, which will be released just a few hours from now. I’m more giddy about the FOMC minutes than the first official trailer of The Avengers movie! Okay, maybe not.

Now, where was I before I got distracted by Chris Evans in his Captain America suit? Oh yes. Back then there’s a chance that the minutes would reveal that the Fed policymakers were close to implementing QE3. If that’s still the case, we might see a huge dollar selloff, which could push AUD/USD even farther away from parity.

AUD/USD FOMC Setup

On the other hand, if the FOMC minutes show that the committee members didn’t have the slightest intention to dole out another round of stimulus measures, we could see a relief rally for the Greenback, which could push AUD/USD back to its former lows.

Since I’m looking to hold a longer-term position with this trade, it would be best if I stick to my STA trading strategies. If the pair breaks above its current highs after the report is released, I could jump in the rally and add every 100 pips, possibly until the 1.0500 or beyond. But if AUD/USD goes back below parity, I could hold on to my short position and add every 100 pips until the .9500 area.

Of course I’ll also be keeping close tabs on the Australian data set for release in tomorrow’s Asian session. I plan to base my bias on the FOMC minutes and my decision to hold on to the trade or not on the Australian jobs data.

Sounds like a plan, yes? Did I leave any gray areas? I want to make sure that my plan is airtight and that I’ve considered all possible scenarios. Hit me up through any of these accounts if you have any ideas:

@Happy_pip Twitter
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Let’s lock in pips today, friends!

Happy time

  • Camelman

    Hi, I am looking at the 4hr chart and it seems like it hit 61.8% (1.0240) couple of times and came back a bit. What you think? Is this a sign of downtrend? Also, MACD is way up there.

    • happypip

      I’ve been watching that level closely too. It seems like it’s still holding despite the positive jobs data from Australia so, unless that 61.8% Fib breaks anytime soon, the downtrend could resume. 

  • Adrian Salmon

    It seems you should have waited for that better entry :-(

    • happypip

      Yep. Also, I think I could’ve considered looking at 1.0200 as a resistance since AUD/USD didn’t react to the positive employment as much as the previous months. That could’ve been a clue that the rally is almost done. What do you guys think? :)

  • Foricks

    I have been trading this channel up (selling the peaks, buying the lows) since the beginning of the month (@ .9700) and am excited that this rally has legs.  wiht QE3 in our not too distant future, we can only hope that gold will rally and bring the Aussie with it.  I will continue to ride this puppy up with my next TP at ~1.0230 – hope that gets hit before helecopter ben opens his pie-hole!   mmm…pie

    • happypip

      Haha good job on that @Foricks! Keep it up!

      • Foricks

        Took profits at 1.0230 (almost to the penny of the high…pretty scary).  I am ready to add to the trade once we get a  retracement to 1.0075.  This is the support on the upward channel.

        • happypip

          Awesome exit price! Are you talking about the one on the daily chart? If Stochastic crosses in the overbought region I might take out my trade already. :)

          • Foricks

            on the 4hr chart…
            looks like the 1 hr is hitting a resistance (may have to jump in early…)

          • happypip

            Looks like it’s approaching bottom daily ATR too. Good idea for a swing trade if the move gains momentum :))

          • Foricks

            looks like I missed the entry on the bottom – on the 1 hr it hit support, but I was waiting for the round top on the 4hr to play out.  Not sure if it will retest 1.0100 today or not, but that is where my new entry point is.  Still up 225 on the other half of this trade :-)
            No position IS a position, right?  plan the trade/trade the plan.

          • happypip

            Yessir! Great trading principles, by the way. Let’s see how AUD/USD plays out in the last day of the week. Congrats and good luck on your 225 pips! :D

          • Foricks

            OK, last post on this trade (honest).  On the 4 hr, it just broke the 62% fib at ~1.0232.  I do expect some pullback or sideways trading as you said for the end of the week, but a breakout puts the next resistance at ~1.0350 which is the top of the channel I have been working as well as a decending channel from Aug 1st on a bigger scale.  I have closed out trades this week for 258 and 515 pips and have one more open that is up ~300, so I will probably jump in to set up this next leg up.  Thanks for the comments, Happy.  Have a great weekend.
            Foricks

          • Foricks

            …just broke down from 1.0130.  Holding for ~1.0075 to buy in.  This also is the 50% fib – coincidence?
            Also, I am staggering two orders, keeping 1 open during the retracement (stop @ break even) since I am in it for the long term.  Working well on this trade, but would like to be back in trade by end of day…

  • John Paige Jr.

    I’ve been trading the AUDJPY, and as you know there is a strong correlation between the two… I think that with thats goin on in the Euro-zone that the risk-appetite will pick back up, seeing how the AUDJPY has been in a up trend (10 day Ema/ 20 day ema cross-over, 60 min) since the 4th….. I say stick with it. Daily EMA cross is imminent…..

    • happypip

      Thanks, your analysis helps. Do you have a trade plan ready for AUD/JPY? :)

    • Marshall Clarke

      I’m with John… AUD crosses have my pippin quite Happy indeed!

      The AUD/JPY established a Daily Higher High by passing the 76.50 level. I’m waiting to enter long after a 1hr retracement back to the 76.50 zone, which will also be a nice Fib setup with a 1hr trend line giving some support too.

      As for me, I just traded the AUD/CAD!  It established a Daily Higher High by breaking through the 1.02 level. The 1hr made a retracement back to the 1.02 level and I went long @ 1.0255. As usual the stop loss was about 2x the 1hr ATR (13) which put the stop at 60pips.

      Right now the initial trade is +120pips.

      I like the approach of comparing all the AUD pairs for the “cleanest” setup…

      • Marshall Clarke

        Exited  @ 1.0385

        Yea! +130 pips!!!

        • happypip

          Congratulations! Keep it up! :)

  • jerz

    Will the new US senate bill on China’s yuan and trade affect AUD’s growth?

     Will the rising AUD cause a negative effect on Australia’s tourism and exports, thus decreasing the AUD in the near future?

    These are questions I have bothering me the past week. :P

    • happypip

      Excellent questions! And I do think they could have a significant impact on the Australian economy and the Aussie in the long run. So far it doesn’t seem like the strong Aussie is bothering their economy since they’ve been printing out pretty strong figures lately, but if the rally keeps up, it could soon take its toll on their exports. Of course that can’t be good for Australia since heavily dependent on their exports. And if that US Senate bill on China gets passed, it could be a double whammy on the Aussie since China is their number one trade partner. 

      Definitely a couple of things to keep tabs on. Let’s see how it turns out!

  • Nihal bhat

    pair was and is toppy. at above parity, it won’t hold in a global slowdown

    • happypip

      Good point. Are you planning to short AUD/USD as a position trade? :)