Good morning, guys! Need an inspiration for catching pips this week? Here’s the best comdoll setup that popped up last week!
Best Setup of the Week
As we can see on the AUD/USD‘s 1-hour chart, the pair encountered strong resistance at the 1.0300 handle near the week’s open price early in the week. Not only that, a bearish divergence and an overbought Stochastic signal would’ve supported our trade idea if we had contemplated on shorting it.
If we had managed to short the pair at 1.0300 and implemented a 100/1/1 STA strategy (initially placing a 100-pip stop, moving the stop to break even and then adding another position every 100 pips), we would’ve ended up with a nice 14:1 reward-to-risk ratio. But wait, there’s more! If we had recognized the weakening of the Aussie’s plunge around the .9800 handle, we could’ve also closed all positions at .9700 for an even sweeter 21:1 reward-to-risk trade!
Too bad I was on the other side of the trade…again. As it turned out, trading AUD/USD’s parity level wasn’t such a good idea when risk sentiment was driving price action so strongly. My AUD/USD swing trade got stopped out before I could even say parity! Hey, at least we learned another lesson at being flexible right? RIGHT?! *sigh*
On to my good news, I’m proud to introduce my new BFF this week!
BFF: Best Forex Friend
Everyone please give Happy snaps to my BFF this week,
bobmaninc is one my good friends on my Comdoll Corners, where you can usually spot him sharing his ideas on AUD/USD.
Upon interviewing my new BFF, I found out that like most of my previous BFFs and other traders out there, bobmaninc only uses price action in his trades. No MAs and other fancy schmancy indicators for this guy!
Another thing that you would want to know about my BFF is that he can’t trade without his saltwater fish tank nearby. He says that it gives him something to look at when he’s not staring at the charts, kinda like a TV that you have to feed. Of course, his 3-year old son is another kind of distraction altogether. But I’ll leave you to ask him about it.
So what is bobmaninc’s tip for other newbies out there? He advised that traders shouldn’t pay too much attention to different fancy strategies out there as it can create unnecessary noise when you’re trying to find a strategy that works for you. In the end, he says that it pays to KISS (Keep It Simple Stupid).
Alright, that’s it for me today! If you have any questions, don’t think twice about contacting me on one of the links below!
Happy trading, my favorite peeps!
What Moved the Comdolls Last Week?
The past few days weren’t pretty for the comdolls, that’s for sure. Except for AUD/USD‘s 26-pip gain on Tuesday, the Aussie, Loonie, and the Kiwi pretty much fell against the Greenback throughout the week.
The comdolls started the week by reacting to not only risk aversion in markets, but also to bearish reports from the commodity-producing countries. New Zealand revealed a weakness in the service sector for the second month in a row in August, while the IMF weighed on the Loonie by downgrading Canada’s 2011 economic growth projections to only 2.1% from its 2.9% forecast in June. Meanwhile, the RBA dispelled talks of an interest rate cut, but it also mirrored the RBNZ’s concerns on global economic growth.
The risk-off theme didn’t change in the middle of the week as traders reacted to the disappointing FOMC statement. As Pip Diddy pointed out in his Daily Forex Fundamentals update, the FOMC’s decision to implement Operation Twist gave the markets an inkling that the major central banks are down to their last options to save their economies. This sparked a ginormous wave of risk aversion, which propelled USD/CAD and AUD/USD beyond their parity levels. I should know, I had swing trade ideas on both pairs!
By the end of the week the comdoll managed to contain their losses as the G20 vowed to address the global economic problems and some traders took profit from the intraweek moves. Still, the bearish news kept popping up from the comdoll countries.
New Zealand showed a weaker-than-expected GDP with only a 0.1% growth in the second quarter from its 0.9% rise in the first quarter. Then, Canada ended the week with a flat retail sales report in July after clocking in a better-than-expected CPI report early in the week.
So, where do you think the comdolls are headed next week? Right now I’m eyeing a sweet doji on AUD/USD’s daily chart, but my confidence on trading the Aussie has been shot recently. For now I’m just wondering what news events could move the comdolls next week. Any ideas? Hit me up on one of the links below!
Enjoy the rest of your weekend, friends!