Trade Closed: 2010-06-30 22:57
My trade looked good for awhile, but once the US session rolled around, we saw another round of selling take place! It’s all good though, my risk is well managed, which means I can fight another day.
I was actually up for awhile, as price bounced off the Fib level. I really thought that I had a winner when I was up about 50 pips but no, it wasn’t meant to be. I should have played this a little tighter and moved my stop right away. First, I was going against recent market sentiment, so I maybe I should have risked less on this trade. Second, given how choppy the markets have been, II need to adjust quickly.
Stopped out at .8360: -154 pips / -1.0%
Trade Idea: 2010-06-29 22:47
This trade just seems too sweet to not take. First of all, price just bounced off the 50.0% Fibonacci retracement level, while forming a doji at that! What’s more is that this these levels also line up with the former neckline of a double bottom that formed last month. This could prove to be a resistance turned support level.
Also, I notice that stochastics are in the oversold territory and is now crossing over. This indicates to me that sellers may have run out of steam and that buyers will see this as an opportunity to buy the Aussie. Besides, AUDUSD has now moved its full weekly average true range of 283 pips. I just don’t think we can see the pair move any lower!
I decided to buy at market, as dojis at the bottom of a downtrend signify a possible reversal. I’ve set my stop at one full daily ATR, which puts my stop past the 61.8% retracement level, as this would signal to me that selling pressure is too strong. The tricky part is selecting a good take profit point for this trade. I’ve decided to set my first take profit point at .8700, which seems to have been an area of interest in the past. Still, given all the choppiness int he market, I may be forced to close this trade before the end of the week, especially with all the potential fireworks from the US non-farm payrolls report.
Yes, yes, I know my trade seems to be going against the grain in terms risk sentiment. I mean, just yesterday, China announced a dramatic downward revision to their leading indicator, from 1.7% to a measly 0.3% increase. Weaker economic growth prospects for this Asian super-nation could have a negative impact on its major trade partners, one of which is Australia.
However, I think traders could realize that their reaction to China’s downwardly revised numbers was exaggerated. Despite those revisions, China and Australia are still on better economic footing compared to other nations, which is why I believe that the Aussie could rebound from its drop.
Here’s my recipe for success:
Long AUDUSD at market, .8517, stop loss at .8360, pt1 at .8700, pt2 at .8850.
Don’t forget to check out my blog at MeetPips.com. Toodles!