AUD/USD – Trade Closed

Trade Closed: 2009-04-13 15:05

Boo Hoo! My trade was stopped out at the open of trading this week as risk taking sentiment takes center stage once again. My short AUD/USD was stopped out as .7200 was unable to hold and I took the full 1% loss on my trade.

Total: -200 pips/ -1.0% loss

So, I took a small hit this time and new questions to answer…Is the worst of the credit crisis and recession behind us? If so, are traders and institutions ready to pour money back into the markets? Will Australia be ahead of the pack in the recovery or is the US going to get out of trouble first?

Whatever the answers may be, AUD/USD looks to be ahead of the US as AUD/USD is breaking above .7270, we may see further gains from here. Let’s see if resistance turns into support and the market in AUD/USD rallies from here. Stay tuned for new ideas!

Trade Update: 2009-04-08 18:00

Good afternoon! My trade was triggered as the RBA cut rates by 25 basis points and volatility took AUD/USD lower to the .7050. That level has held so far and the market has kept the pair rangebound between .7050 – .7150 this whole week.

There is a mixed sentiment out there when it comes to the comdolls as many believe going long the AUD, NZD, and commodities will be the smart trade when the globe gets out of the recession. That’s probably the correct thesis, but the question is, “when will we get out of the recession and back to growth and demand for commodities?” With job losses continuing across the globe and no slowdown in site for job losses, it may be quite sometime before consumers start consuming again. If we continue to see economic weakness, with all of it’s issues the US markets and the US Dollar may still be the safe haven of choice. Also, we may see further rate cuts, possibly down another 100 basis points, from the RBA. So, no certainty in sight still, but the markets wouldn’t be as interesting if everything was certain and straightforward…right? :)

So, I will continue to hold and we may see some volatility once again tomorrow as it is the last day before the holiday weekend and we do get employment data from Australia. Forecasts are that the employment rate will move to a five year high of 5.4%. We’ll have to wait and see. If we do see surprise numbers showing that figure or worse, we may see the break out needed for my trade. If better than expected, that consolidation may turn into a breakout to the upside. I’ll just wait and see. Stay tuned! :)

Trade Idea: 2009-04-06 12:39

comdollsff

Good afternoon! We are getting a few technical signals that the AUD/USD may be poised for a reversal down lower. Has the “risk rally” run out of steam? Let’s check it out!

It looks like this week is starting off with a return to a reduction of risk as equities fall on concerns that banking losses will exceed those during the Great Depression. This has sparked off a reduction in risk in the currency markets as well as money flows back into the Greenback. We may see further flows to the Greenback from the Aussie as we get into the Reserve Bank of Australia rate decision tomorrow (4/7 4:30 am GMT). Economists are expecting no change, but there is a possibility of a rate cut as Governor Steven’s comments have left the door open. Also, forecasts for global growth in 2009 have left most traders feeling that demand for raw materials and exports will be in less demand from Australia. Short term support may be limited for the Aussie.

I have the daily chart posted above and we have a few technical signals to consider. First, we have a doji candlestick near previous resistance, indicating indecision in the markets as neither buyers nor sellers won the day. Today, we do see a bearish candle, so AUD/USD maybe poised for a reversal. Stochastics are in overbought conditions, indicating that the market may have run out of buyers. It is a bit too early to tell, but stochastics may be turning lower as well. If so, and if stochastics made a lower high as price action made a higher high, then that creates a divergence signaling a reversal as well.

So, I am going to sell if there is a break lower beyond yesterday’s low around .7060. My stop will be a large 200 pips – just a bit more than the daily average true range of around 160 pips. That should be enough breathing room for this longer term trade. Here’s what I’m going to do:

Short AUD/USD at .7050, stop at .7250, pt1 at .6850, pt2 at .6300

Remember to never risk more than 1% of a trading account on any single trade. Please adjust position size accordingly.

If my trade is triggered and my first profit target is hit, I will close out my trade, adjust stop to break even on the remaining position, and trail my stop by 200 pips.

Stay tuned my friends!

  • chady250

    Hmm Ill take a gamble…Short at .7050 when the time comes

  • camelman

    Excellent analysis …. sounds good to me.

  • chady250

    Hmm Ill take a gamble…Short at .7050 when the time comes

  • camelman

    Excellent analysis …. sounds good to me.

  • cadarkitek

    I favor a weak $ hence my bias is Long on this pair and all the other majors. $ correction in the making.

  • engin

    it can test 7265 and 7310. and that prices are short chances surely; if it wont move below 7050 before reach that points and beware of long bars

  • cadarkitek

    I favor a weak $ hence my bias is Long on this pair and all the other majors. $ correction in the making.

  • aokmanga

    RBA Rate Cut Statement
    link to rba.gov.au

    Good for us!!

    I’m short at 0,7160

  • engin

    it can test 7265 and 7310. and that prices are short chances surely; if it wont move below 7050 before reach that points and beware of long bars

  • engin

    now its ready to test 7255-65 and 7310 be carefull!!!

  • aokmanga

    i closed my position at 0.7080 and now i’ll wait to restart from an higher price :)

  • pipnigma

    Great analysis, since you are trying to do a risk free trade (when PT1) is achieved. why won’t u swing for the fence? call it 0.55-0.53 for PT2?

  • aokmanga

    RBA Rate Cut Statement
    link to rba.gov.au

    Good for us!!

    I’m short at 0,7160

  • engin

    now its ready to test 7255-65 and 7310 be carefull!!!

  • aokmanga

    i closed my position at 0.7080 and now i’ll wait to restart from an higher price :)

  • pipnigma

    Great analysis, since you are trying to do a risk free trade (when PT1) is achieved. why won’t u swing for the fence? call it 0.55-0.53 for PT2?

  • camelman

    Now thats not fair. Lower unexpected interest rates from australia and it doesn’t tank ???? pipnigma are you serious? you want to wait till 0.55-0.53 I think you will definetly be stopped if you aim that low. Unless you have a really high stop.

  • camelman

    Now thats not fair. Lower unexpected interest rates from australia and it doesn’t tank ???? pipnigma are you serious? you want to wait till 0.55-0.53 I think you will definetly be stopped if you aim that low. Unless you have a really high stop.

  • engin

    dont make me laugh where did come from 0.55 by the way its first target 0.7265 and .7310
    73.10 can hold price but 0.66 is very strong and in medium term target 0.7550 and 0.79
    note that my comment anywhere because if price rolling lucky seven i expect @0.79 price target will be 0.60 again and
    that will be 4th action so then in long term target will be 0.92

  • engin

    dont make me laugh where did come from 0.55 by the way its first target 0.7265 and .7310
    73.10 can hold price but 0.66 is very strong and in medium term target 0.7550 and 0.79
    note that my comment anywhere because if price rolling lucky seven i expect @0.79 price target will be 0.60 again and
    that will be 4th action so then in long term target will be 0.92

  • fed

    Engin bey merhaba. Guys this trade is a snoozer so far. It won’t break the sup 7030-7040 line yet. Lets see what happens at the end of the asian session, I doubt anything though, but I think the euro and N/A sessions will move this pair with some upcoming news like Initial Jobless Claims for the states looks bad but comparing it to last month’s month is not too bad, that news could favoure this trade.

  • fed

    aussie employment just came -34k, it is worse than expected.
    thiscould change things a lil.

  • fed

    Engin bey merhaba. Guys this trade is a snoozer so far. It won’t break the sup 7030-7040 line yet. Lets see what happens at the end of the asian session, I doubt anything though, but I think the euro and N/A sessions will move this pair with some upcoming news like Initial Jobless Claims for the states looks bad but comparing it to last month’s month is not too bad, that news could favoure this trade.

  • fed

    aussie employment just came -34k, it is worse than expected.
    thiscould change things a lil.

  • aokmanga

    engin you are the best

  • aokmanga

    engin you are the best

  • fed

    the price is retesting again the 7200 line when it became a resistance on april 1 and 2, so far not enough sellers. hopefully 7200 line will not break and the price will go down to favoure our trade. If the 7200 breaks then I give up on this trade. see what happens

  • fed

    the price is retesting again the 7200 line when it became a resistance on april 1 and 2, so far not enough sellers. hopefully 7200 line will not break and the price will go down to favoure our trade. If the 7200 breaks then I give up on this trade. see what happens

  • pakiestra

    It would be probably more on the cautious side to close whole/part of the trade before 2 days (excluding weekend) holiday period with a very low liquidity and a potential for a rapid swings in price. Futures are pointing towards at least 50 pips open and AUS can gap up to 50 pips. On the fundamental side I would lean towards a relative strenght of Aussie and Kiwi just because of the: a. still high rates leaving space for some carry trade activity because these economies (as oppose to Europe) are not likely to pursue a quantitive easing and their rates still remain high so it offests decreased need for commodities in the shrinking wordeconomy. But who knows. Let’s see how the price responds to next S/R level at 0.7600 -7650

  • pakiestra

    It would be probably more on the cautious side to close whole/part of the trade before 2 days (excluding weekend) holiday period with a very low liquidity and a potential for a rapid swings in price. Futures are pointing towards at least 50 pips open and AUS can gap up to 50 pips. On the fundamental side I would lean towards a relative strenght of Aussie and Kiwi just because of the: a. still high rates leaving space for some carry trade activity because these economies (as oppose to Europe) are not likely to pursue a quantitive easing and their rates still remain high so it offests decreased need for commodities in the shrinking wordeconomy. But who knows. Let’s see how the price responds to next S/R level at 0.7600 -7650

  • joni

    Hi guys,

    Desperately need some help from FX experts

    I currently have a fair bit of USD, miss out the chance to convert USD to AUD when sitting on .64 back in early March.

    Wanting to convert my USD to AUD, Is there any chance USD will come strong again?
    Should I convert USD to AUD now at .73 or HOLD and hope it will get to at least .68 or even lower???

    Any comments will be much appreciated.

  • joni

    Hi guys,

    Desperately need some help from FX experts

    I currently have a fair bit of USD, miss out the chance to convert USD to AUD when sitting on .64 back in early March.

    Wanting to convert my USD to AUD, Is there any chance USD will come strong again?
    Should I convert USD to AUD now at .73 or HOLD and hope it will get to at least .68 or even lower???

    Any comments will be much appreciated.

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