Close Trade: 2009-07-31 08:21
Volatility took AUDUSD up just enough to hit my short entry orders at 0.8300. The pair fell from that level during the European trading session to a low of about .8260 before treading back higher to its current level around .8280. With US GDP coming up soon I have decided to close my trade down to avoid major event risk.
Close trade at market (.8285)
Total: +15 pips/ +0.27% gain
Thanks for checking out my blog, good luck and good trading! Have a great weekend!
Trade Idea: 2009-07-30 15:19
Good afternoon! I’ve got a day trade idea based on a technical setup on AUDUSD. Are sellers ready to push the pair lower or is a new breakout higher imminent?
Today’s setup is a counter trend play on AUDUSD. Earlier this week, AUDUSD broke below a rising trendline on general risk aversion. The market the previous major support area between .8100 – .8150, and there were enough buyers to push the pair back up to the rising trendline and previous resistance area around .8300. With stochastics indicating overbought conditions on the one hour timeframe, it may be time for the pair to swing lower.
Before I go how I am going to play AUDUSD, gotta take a quick look into fundamentals.
Australia fundamentals are still looking to be the tops relative to the other major industrialized countries and interest rates are rocking at 3% vs. 0.25% in the US. There is speculation that Australia will be amongst the first to start raising rates once signs of recovery takes hold – maybe even before then. But this is a day trade idea, so let’s look toward tomorrow’s economic events. The market mover of the day may be the US GDP data. Forexgump did an excellent write-up on tomorrow’s US GDP release, so don’t forget to check it out. He reports that many economists predict that it may be the fourth consecutive decline of around 1.3%. A decline beyond that may bring another round of risk aversion, but if we see less of a drop, or even growth, the rally in risk could be pushed even higher.
This event could bring a lot of unpredictable volatility, so I will close out my orders or open position ahead of this data. Here’s what I am going to do:
Short AUDUSD at .8300, stop at .8355, pt at .8190
Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.
Let’s see if volatility can hit .8300 before sellers jump back in. Stay tuned and good luck!