AUDUSD: Breakdown in Sight – Trade Closed

Trade Closed: 2010-08-29 22:00

PoD Chart

Ouch! AUDUSD zoomed back up the .9000 handle as the Greenback sold off like pina coladas on a hot summer day last Friday. Apparently, Fed head Ben Bernanke said that the central bank is ready to do whatever it takes to nurse the US economy back to life. And, based on all those downbeat US reports we’ve been seeing lately, it sure looks like their economy needs some TLC! Even though Australia has been suffering its share of weak data, traders’ disdain for the Greenback certainly outweighed the bearish mood of the Aussie then.

Boo hoo, I was up by almost a hundred pips already before this pair suddenly reversed its course. Do you think I held on too long to this trade?

Anyway, here’s what happened:
Stopped out at .9025. P/L: -175 pips / -1%

Oh dear, looking at the damage on my account, Happy Pip may be turning into Sad Pip now. I guess I’ll just go out for some frozen yogurt to cheer me up…

Trade Update: 2010-08-24 3:58

Yipee! My trade got triggered during the US session last Friday and it looks like it’s finally heading my way now. AUDUSD gapped down over the weekend so I took that as a signal to hold on tight to my trade. The price may have zoomed up close to the .9000 handle yesterday but it dropped like a rock as risk aversion settled back in the markets. It looks like my stop at .9020 was properly placed then. Phew!

I’m keeping my fingers crossed that this pair drops it like it’s hot! Wish me luck, forex folks!

Trade Idea: 2010-08-20 4:08

PoD Chart

The currency gods have answered my prayers! I have found another trade set up and let me tell you, it’s pretty sweet… like chocolate truffles! Mm-mmm!

Just check out that head and shoulders formation on AUDUSD. I think I’m going play the break and set a sell order just below the neckline at 0.8850. Well, it looks like the pair is still testing the resistance at the 0.8900 handle so I’m just gonna wait it out. Stochastics on the 4hr indicates that the AUDUSD is still oversold though so this might take a while.

I’ve been looking at this setup for quite a while now, just waiting for some fundamental reason to back my trade idea up.

According to Pip Diddy there are a few reasons why I may just hit a winner with this one. First there’s the Australian elections tomorrow. From what I’ve heard the race for the Prime Minister post is neck and neck between the current leader Julia Gillard and opposition’s bet Tony Abbott. Although I’m sure that both are very competent to lead the land of Cadbury Cherry Ripe but the political uncertainty just doesn’t sit well with the bulls.

There’s also the takeover bid of the Australian company BHP Billiton for the Potash Corporation which is based in Canada. “Eh, so how does add up to the Aussie’s weakness?” Simple my friend. See, these are the billion-dollar deals which means that billions of Aussie dollars are going to be sold in exchange for Loonies to make this deal. Ring-a-ding-ding! I hear Aussie bear bells ringing!

Lastly, I think that the disappointing reports from the US yesterday could continue to pin down the market’s risk appetite and convince investors to distance themselves from the higher-yielding Aussie.

Here’s what I’m gonna do:

Short AUDUSD at .8850, stop loss at .9020, pt1 at .8700, pt2 at .8500. Of course, I’m gonna risk 1% of my account on this swing trade.

I’m looking forward to reading your feedback on this one. Feel free to post a comment below or hit me up on MeetPips.com. Come on, don’t be shy now!

  • SteveOng10

    but there is a resistance-turn-suport at around 0.8870 which acted as resistance on 14 July & turned to be support at 16 Aug? But your fundamental reasons do sounds making sense. I’ll look for the aussie to break this support.

  • SteveOng10

    but there is a resistance-turn-suport at around 0.8870 which acted as resistance on 14 July & turned to be support at 16 Aug? But your fundamental reasons do sounds making sense. I’ll look for the aussie to break this support.

  • Mike060375

    Watch at the daily chart.
    In my view there are:

    a clearly uptrend and
    a support on 0,8855/0,8845 and
    a support on fib-50% at 0,8630

    So, if AUDUSD breaks the 0,8850 there ar no huge possibility to take an aceptable Risk/Reward-Ratio.

    What do you mean?

  • CyclonePip

    Short at .9070, the 61.8 fib on the 4hr chart. This should be a good long term trade into mid October. I like your stop above the 38.2 fib level. Going to add some more if it retraces back up around .8940, good luck everyone!

  • Mike060375

    Watch at the daily chart.
    In my view there are:

    a clearly uptrend and
    a support on 0,8855/0,8845 and
    a support on fib-50% at 0,8630

    So, if AUDUSD breaks the 0,8850 there ar no huge possibility to take an aceptable Risk/Reward-Ratio.

    What do you mean?

  • CyclonePip

    Short at .9070, the 61.8 fib on the 4hr chart. This should be a good long term trade into mid October. I like your stop above the 38.2 fib level. Going to add some more if it retraces back up around .8940, good luck everyone!

  • Foureggs

    Interesting one to watch, however im doubtful as the AUD shot up yesterday to about the 90cent mark. Also with the election over here it seems its a win/lose either way so im not sure how much it will effect the economy, however the ASX stood pretty still yesterday.

  • Foureggs

    Interesting one to watch, however im doubtful as the AUD shot up yesterday to about the 90cent mark. Also with the election over here it seems its a win/lose either way so im not sure how much it will effect the economy, however the ASX stood pretty still yesterday.

  • happypip

    Thanks for the feedback guys! Yup, I’m waiting for those support levels to break and I think the fundamental reasons could be enough to trigger that. The pair may have shot up towards the .9000 area but I think that level would hold as strong resistance so I placed my stop a few pips above that.

  • josephphilip

    That is one complete recite that’s for trustworthy. Thanks for pointing us in the direction of this eager resourcefulness slant.
    I read a lot of posts on a daily basis and for the most part, people lack substance but, I just wanted to make a quick comment to say I’m glad I found your post. Thanks!

  • happypip

    Thanks for the feedback guys! Yup, I’m waiting for those support levels to break and I think the fundamental reasons could be enough to trigger that. The pair may have shot up towards the .9000 area but I think that level would hold as strong resistance so I placed my stop a few pips above that.

  • josephphilip

    That is one complete recite that’s for trustworthy. Thanks for pointing us in the direction of this eager resourcefulness slant.
    I read a lot of posts on a daily basis and for the most part, people lack substance but, I just wanted to make a quick comment to say I’m glad I found your post. Thanks!

  • jamesvdm

    Damn AU! I too had got stopped out this morning.

  • jamesvdm

    Damn AU! I too had got stopped out this morning.