Best Comdoll Setup of the Week:
And my favorite pair AUD/USD takes the cake again with this 6-to-1 win! The rest of the comdolls also showed profitable setups but AUD/USD had the best reward-to-risk ratio. Check out the chart below to see how the setup played out:
The pair formed a nice doji at the week open price (.9982) right at the beginning of the trading week before it trended lower for the next few days. As I pointed out earlier, risk aversion stayed in the markets for yet another week as euro zone debt problems just seemed to keep growing worse.
Since the selloff was really strong, I could’ve added another position at a retracement. The .9900 handle, which was in line with the 38.2% Fib then, would’ve been a nice level to enter another short position. Had I done that and aimed for the .9700 major psychological support, I would’ve ended up with a total of 480 pips on the trade. With an 80-pip stop on my initial position, that would’ve been a 6-to-1 return!
But hey, I’m still happy with my NZD/USD short trade last week. In fact, I managed to end up positive for the week as I locked in half of my wins before price gapped up over this weekend. I’ll keep you posted on how that trade turned out, all right?
Do you have any comdoll trade ideas lined up for me this week? I’d love to hear your ideas! Hit me up through the comment box below or through any of these accounts:
Let’s make more pips this week!
What Moved the Comdolls Last Week?
The comdolls woke up to a bearish party on Monday as risk aversion loomed over the markets. And it wasn’t just the falling gold and oil prices either! Canada’s wholesale sales and New Zealand‘s visitor arrivals report both disappointed expectations, which probably fueled the investors’ fears.
On Tuesday the comdolls experienced some relief when the U.S. showed a strong GDP report; Canada’s retail sales printed better than analysts had expected, and the latest FOMC meeting minutes showed that the Fed is more open to easing than markets previously thought.
Too bad the comdoll bears returned with a vengeance on Wednesday when reports from the euro zone reminded investors on just how big the region’s debt problem really is. Apparently, Germany’s bond auctions failed to get a respectable number of bids, which suggested that investors are staying away from the euro zone’s debts altogether.
If you remember, German bonds are perceived to be one of the safest among the region’s government bonds. If Germany can’t get enough demand for its bonds, then what more can we expect from bonds from the peripheral EZ economies?
The markets barely moved on Thursday as traders from the U.S. celebrated the Thanksgiving holiday, but we saw the crazy chart action return on Friday as trading volume picked up. And yup, you guessed it. The traders went back to selling the high-yielding currencies! And I can’t blame them either. The three major credit ratings agencies went on a downgrade spree in the euro zone with Moody’s downgrading Hungary to junk status around the same time when Fitch demoted Portugal to the same status. Meanwhile, S&P downgraded Belgium from AA+ to AA.
Do you think that we’ll see more comdoll selling next week? Or are the comdolls already way oversold? Lemme know what you think! I’ll be right here on these pages:
Enjoy the rest of your weekend!