Day Trading AUD/USD’s Uptrend! – Trade Closed

Trade Update: 2012-08-10 1:27
Boo hoo! So much for a day trade! Despite an upbeat RBA statement and upgraded Australian growth forecasts, AUD/USD gave in to risk aversion yesterday and gave my account a huge dent. As it turns out, weaker than expected Chinese data was enough for traders to let go of the higher-yielding Aussie!

AUD/USD Trade Update

Because of that, AUD/USD was unable to break above the 1.0600 handle after a couple of attempts. Later on, the pair slid back down to trigger my second long entry and eventually stop me out on my trade.

I know most of y’all have been warning me against this particular trade since AUD/USD was giving several bearish technical signals on the longer-term time frames and I should’ve taken your advice. I’ve been seeing conflicting signals when it comes to fundamentals and technicals lately, but it’s nice to know that you guys got my back!

Maybe I need to take a bit of a break to clear my head and hopefully get a better feel of the markets next week. See you on the other side of the weekend, folks!

Trade Idea: 2012-08-09 02:27

Guess who’s jumping in on AUD/USD’s rally? I am!

Over the past couple of days my Twitter friends and I have been waiting for an opportunity to short the comdolls. Heck, I even pointed out the divergences on this week’s Comdoll Trading Kit!

Unfortunately, we didn’t have fundamental basis for shorting the comdolls. Gold and oil prices are on a roll this week, and Australia in particular had just shown us its surprisingly stronger-than-expected employment numbers for July. Even China is contributing to the rally when its inflation report lessened PBoC rate cut speculations.

And then there’s AUD/USD’s irresistible chart setup. The pair broke above the 1.0600 early this week, and it doesn’t look like the Aussie bulls aren’t resting anytime soon.

AUD/USD Day Trade

After hours of waiting, I finally found a possible retracement level where I can enter my day trade. I just entered 0.50% of my account at market (1.0595) since it’s right near the 38.2% Fib on the 15-minute chart. I placed another order worth 0.50% at the 61.8% Fib, which is near a former support and today’s open price.

I placed my stop loss at 1.0560 since it’s just below the rising trend line and the week open price that we had marked on this week’s Comdoll Trading Kit. I’m planning to take profit around the 1.0650 area, but I’ll probably move my stop to break even as soon as the pair makes a new high today.

To recap, here’s my plan:

Bought at market (1.0595), placed another buy order at 1.0575, initial stop loss at 1.0560, initial profit target around the 1.0650 area.

Make sure you read the risk disclosure if you’re planning to take this trade with me!

What do you think of this day trade? Is this something you could take? Your two cents are most welcome!

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Have fun and good luck trading this week, friends!

Happy time

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  • Friend Of Trend

    I had the practically the same thoughts as you. I almost missed the boat when the AUD went over 1.061, but I have to thank Europe for the nice retracement back to 1.057 to give me the second chance jump in at 1.058 (which I barely caught in time as well… crazy day today…).

    The Chinese inflation numbers alone should give this baby all the momentum it needs to reach your T/P target (“touch wood, metal, plastic, etc.). The soft landing is for real! (well, almost… I think :P).

    Only thing that would ruin this party is if Europe starts falling apart…. again…. everyone always seems to go emo when they do….

    • happypip

      True dat! I think Chinese data got the better of it this time and markets seemed to ignore the upbeat RBA statement. How did your trade turn out?

  • Daniel

    if you zoom out on the daily TF youll see that we are almost touching the falling trendline and if that line is respected there will be a nice long term shorting opportunity :)

    • happypip

      Yep, and that’s the top of the rising channel on the 4h also. It’s just that AUD/USD has been testing those resistance levels for quite a while now that I thought that a breakout was in store. Apparently not :(

  • Friend Of Trend

    Risk sentiment is definitely a very funny thing. There have been some very good, positive fundamental news from both China and the US in the past 24 hours, and the fact that the market mood is actually risk averse is cracking me up! Just like how the market overreacts when news does not turn out “as bad as they had expected”….

    Following up from Daniel’s post, there indeed does look to be a shorting opportunity coming up on this pair in the future. The 30 minute chart shows a rising wedge forming over the past 6 trading days, while the daily chart shows the AUD is currently trading at the top of the trend channel. Should be interesting times :P

    • happypip

      Interesting times indeed! I’m getting mixed signals from technicals, which signal a short bias, and fundamentals, which seem to support AUD. Just a matter of figuring out which ones have bigger impact, I guess.

      • Friend Of Trend

        Hi Happy Pip. I closed my trade at 1.0553 after the 1.056 support line got broken. The past 12 – 13 hours of price action showed a rectangle on the retracement direction, so if the chart pattern holds true, it might go even lower (potentially below 1.054 according to Babypips school :P). I am also estimating a market over-reaction to the possible news that China may not meet export estimates. And heck, even if China does meet or exceed the estimates, the immediate trend now is to under-react positive news…. the trend hasn’t been very friendly so far I fear… :P

        • Friend Of Trend

          Looks like it went down in a pretty big way Happy Pip :( Just touched 1.052 as I was writing this post. Hope you were able to minimize your losses.

          • happypip

            Echhh, that was terrible. For my trade, I mean. To think I was counting on the RBA’s growth forecast upgrades to boost this pair. Ho humm, now I got stopped out for real. Better luck to us next time! :)

        • happypip

          Ha! That’s an interesting take. Overreact to negative news then underreact to positive news. Very typical of the markets if I may say so myself! I’ll keep that in mind next time.

  • JJ6845616

    At the time of writing i am posting my comment here because AUD/USD has recently touched your stop loss 10 seconds(12:05 GMT) ago due to risk aversion in the markets.You setup was not bad though because AUD is still the strongest currency and it resisted much in this strong risk off environment but hard luck for you..Anyway good luck for the next trades girl!

    • happypip

      Aww, thanks for wishing me well! Fortunately, I was saved by the spread and I’m still in this trade. I was a bit surprised when I checked the charts since I was already bracing myself for a 1% dent on my account. But now I’m not quite sure what to do… Should I hold on or just cut my losses right now?

      • JJ6845616

        You are a better trader..but risk off tune in the markets might hurt u!

  • High Speculation

    Hi HappyPip,

    I was tempted to follow you but then I read some other stuff that showed the negative signals. This morning (Asian session) I went short so I was lucky.

    There are too many conflicting signals just like you say. For now it’s looking bearish but what happens if the Europeans finally act? The Aussie could turn very quickly!

    Have a good weekend and keep putting up your trading ideas as I read and follow them closely.

  • jamessheppard1985

    You cant win them all Happypip so dont worry about it! I think this trade shows that when your not sure stay out!