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!
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
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!