Close Trade: 2009-01-23 12:00
Hello! I’ve been in this trade for over a week, and it looks like the current leg of the downtrend is running out of steam, especially as it finds support around .6500. It’s the end of the week and I have decided to close my trade to lock in profits.
Close remaining position at market (.6515).
1st Half: +200 pips
2nd Half: +355 pips
Total: +1.39% gain
So, it is a great way to head into the weekend. I am still short bias in the short-term on AUD/USD, but I think we may see a bounce higher from these levels on profit taking and gold gaining some steam. Could mean great opportunities to short again next week – stay tuned and have a great weekend!
Trade Adjustment: 2009-01-20 20:13
Good Evening! Risk aversion continued to dominate price action across global markets, and AUD/USD fell to a low around .6450 in today’s trade. I have decided to adjust my stop to lock in further profits.
Adjusting stop on remaining position from .6870 to .6670.
This locks in a very nice gain and creates a risk free trade. I will continue to target .6100 and adjust my stop along the way. Stay tuned for updates and adjustments!
Trade Update: 2009-01-19 14:20
Good afternoon! It was a close call of almost being stopped out on my remaining position as AUD/USD rallied at the end of last week. The retracement made a high around .6850, just below my breakeven point of .6870 before falling to current levels around .6725.
I am still bearish on this pair in the short-to-medium term on the ongoing economic crisis and that we will see interest rate cuts out of Australia. The US is probably done with its own interest rate cutting schedule as interest rates stand at 0.25%. Now I mentioned short-to-medium term as it is speculated that the US will get out of the economic slump, but in the longer term the US is creating the biggest fiscal deficit in the world. Eventually, trader focus will shift from the credit freeze/bank crisis back to economic fundamentals. This makes me cautious on any long US Dollar trades long term.
For now, I will continue to hold short and we may see some volatility at the end this week with events on the calendar from the US including jobs and housing data. Stay tuned for updates and possible adjustments!
Trade Update: 2009-01-13 09:13
Greetings! Just a quick update and adjustment as the Greenback continues to strengthen across the majors, pushing my short position in AUD/USD down to hit the first profit target. Half of my position was closed at .6670 to lock in profits and now it’s time to adjust my stop.
Today’s boost in the US Dollar was on the heels of a better that expected US Trade Balance data. It seems financial markets are also back to risk aversion mode as commodities and equites are falling along with currency carry trades. Forecasts that growth and interest rates will stay down through 2009 will continue to hamper any growth in risk sentiment for now.
With that view, I plan on holding onto my trade for now. There’s still plenty of data left for the week, so stay tuned for updates and potential adjustments!
Trade Idea: 2009-01-12 09:29
After a bit of waiting, there is a basic trendline break on the daily chart and it looks like it may hold this time. Stochastics are falling out of overbought levels and starting to trend lower. It’s a simple technical setup in which I will play the break and target previous lows just above .6000.
Fundamentally, the world is still in a recession. Jobs are being lost, consumers are spending less, and demand for raw materials is rapidly falling. With commodity prices falling, this affects commodity export driven economies like Australia. The US has taken extraordinary measures to fight the recession and now the rest of the world is starting to do the same. The RBA may cut rates further from 4.25% to spark growth, and if we do see rates fall in Australia the Aussie may do the same against the Greenback and the Japanese Yen.
So, in the short-term, I am short biased on the Aussie and with the trendline break, we may see a return to the longer term downtrend. I am jumping in short at the market and my stop will be a bit more than the average daily range of 175 pips. Here’s what I’m going to do:
Stay tuned my friends!