AUD/USD – Trade Closed

Trade Closed: 2009-02-05 14:40

My trade closed shortly after I posted my update as the US Dollar sold off across the majors on weak ADP data and ISM Services data. AUD/USD rallied and hit my adjusted stop at .6490. My remaining position was closed out at breakeven.

1st Half: +90 pips
2nd Half: +00 pips
Total: +0.50% gain

AUD/USD is back up to the falling trendline and trading around the 61% Fib line. I will hold off trading this area as we head into tomorrow’s US jobs data and as we close out the week. This report is a beast in that it causes very fast markets, so I will avoid putting any new positions until the market digests tomorrow’s numbers. Stay tuned!

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Trade Adjustment: 2009-02-04 08:56

Good morning! Looks like my trade idea has panned out so far as AUD/USD hit my first profit target at .6400. Half of my position was closed there and now it’s time for some adjustments!

Half trade closed at .6400 to lock in profits. Adjusting stop on remaining position to .6490 to create a risk free trade. Will continue to target .6260 and trail my stop along the way.

So far so good, but with US jobs data coming up I may have to make some adjustments before the end of the week. Stay tuned!

Trade Idea: 2009-02-03 10:27

comdollsff

Greetings! It looks like another volatile week ahead of us in currencies, and with the boost higher to the Aussie after the RBA rate cut earlier today there may be another opportunity to play the longer term downtrend.

The Reserve Bank of Australia cut down by 100 basis points to take the cash rate to 3.25% during the morning Asia trading session. They cited the weakening state of the global economy and there were no indications that they may cut in the next meeting. The Aussie rallied against the Greenback soon after the announcement, probably on profit taking as it seems the rate cut was priced in before the announcement. It may also be on the account that traders were possibly hoping for a larger rate cut as many think the RBA may need to catch up with other central banks to fight the global recession.

This bounce higher is presenting an opportunity to play AUD/USD short on my views that we are still in a global recession and that we will be for quite some time. Commodity prices have fallen and demand for raw materials from Australia has become scarce. This has hurt the the exports as they drop 3% in recent readings and the fall in the Trade Balance as well.

On the chart, I’ve got up the usual indicators and tools: Fibonacci and stochastics. Stochastics are showing the current retracement is close to reaching overbought levels, and with the Fibonacci retracement tool, we may see resistance around the 50% – 61% Fib levels. The psychologically significant number of .6500 coincides with those levels, so I will short around there. Here’s what I’m going to do:

Short AUD/USD at .6490, stop at .6580, pt1 at .6400, pt2 at .6260

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

Stay tuned my friends for updates and adjustments, especially ahead of the US employment data at the end of the week!

  • kliopp

    I’m with you in this trade.I know you are the best.

  • bilal_shirazi

    looks like a reversal..

  • Babysteps

    Hi
    Not sure about it, For me looks long not short chance.
    Let’s watch it

  • julian

    happy pip.. i could really do with you being right and babysteps being wrong ! close call at the moment

  • volodja

    I also think the pair will decrease because technically it is in the downtrend on the daily chart and fundamentally we have Australian Trade Balance decreased more that expected and US Pending Home Sales increased more than expected.

  • volodja

    Happypip, why did you place your stop at .6580 and not at the hourly local maximum of .6600?

  • kliopp

    I’m with you in this trade.I know you are the best.

  • MonsterTrader

    Im in w/ you :)

    Also what are your stoch settings?

  • bilal_shirazi

    looks like a reversal..

  • Babysteps

    Hi
    Not sure about it, For me looks long not short chance.
    Let’s watch it

  • julian

    happy pip.. i could really do with you being right and babysteps being wrong ! close call at the moment

  • volodja

    I also think the pair will decrease because technically it is in the downtrend on the daily chart and fundamentally we have Australian Trade Balance decreased more that expected and US Pending Home Sales increased more than expected.

  • volodja

    Happypip, why did you place your stop at .6580 and not at the hourly local maximum of .6600?

  • enochbenjamin

    i was already in at 6537 and for some unknown reason got cold feet and jumped ship at 6530 – aye curumba!

  • Pips-ahoy

    Perfect .618 retracement almost exactly to the pip. Lets see how it plays out.

  • MonsterTrader

    Im in w/ you :)

    Also what are your stoch settings?

  • enochbenjamin

    i was already in at 6537 and for some unknown reason got cold feet and jumped ship at 6530 – aye curumba!

  • Pips-ahoy

    Perfect .618 retracement almost exactly to the pip. Lets see how it plays out.

  • PipEater

    Nice trade!! Got some pips thanks to you!! How often have you been on chat room?

  • enochbenjamin

    hmmm – another opportunity to get on board

  • PipEater

    Nice trade!! Got some pips thanks to you!! How often have you been on chat room?

  • LoboTrader

    Happy Pip. Congratulations, and once again, you are the star trader of this page. Regards

  • PipViper

    well that was a fantastic trade.
    I also enjoy your indicator. I have added to all of my templates.

    Sssssssssss

  • enochbenjamin

    hmmm – another opportunity to get on board

  • LoboTrader

    Happy Pip. Congratulations, and once again, you are the star trader of this page. Regards

  • PipViper

    well that was a fantastic trade.
    I also enjoy your indicator. I have added to all of my templates.

    Sssssssssss

  • happypip

    Thanks for the comments everyone! volodja – 90 pips is half the average true range of 180 pips for AUD/USD. Since the pair already rallied 180 pips to my entry point from the previous day close of around 6315 I think another 90 pips would have been enough cushion to handle the current volatilty. Monster Trader – my stoch settings are 14,3,3.

  • happypip

    Thanks for the comments everyone! volodja – 90 pips is half the average true range of 180 pips for AUD/USD. Since the pair already rallied 180 pips to my entry point from the previous day close of around 6315 I think another 90 pips would have been enough cushion to handle the current volatilty. Monster Trader – my stoch settings are 14,3,3.