Forex Trade Idea: AUD/USD Retracement to .8700?

Hey, comdoll buddies! I’m back with another short-term technical forex trade idea for this week. Let me know what you think of this AUD/USD setup.

AUD/USD 4-hour Forex Chart

AUD/USD 4-hour Forex Chart

I’m looking at this simple pullback setup, as the pair recently broke below support at the .8700 handle. The 38.2% Fibonacci retracement level seems to be holding as resistance but I’m thinking AUD/USD could still make a higher correction until the .8700-.8750 mark before resuming its drop.

Risk appetite appears to have weakened lately due to resurfacing geopolitical tension in eastern Ukraine, and this might take its toll on the higher-yielding comdolls. Apart from that, economic data from Australia and China have mostly been disappointing, which suggests further downside for this pair.

I’ll wait for reversal candlesticks around my sell area before setting orders andย I plan to set my stop past the 61.8% Fib or the .8800 mark. I’ll be aiming for new lows but I’ll be trailing my stop once price tests the previous lows around .8550.

What do you think?

Cheers!

Happy time

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  • Jake

    Hi Happy-pip
    I think this is a solid trade idea, and it’s actually a trade I’m already in, targeting 0.8475

    • Thanks for the positive feedback! I haven’t been able to get in yet since I haven’t seen any reversal candlesticks so far. Keeping my eyes glued to this though!

  • ForExchange

    Hi Happy Pip,
    I couldn’t read your trade idea yesterday so I am not sure if you entered it or not. On the other side I remember some time ago you shorted NZD/USD, I expressed my worries but you made a nice win anyway.

    I think this trade is similar: 1. I might express my worries, 2. you enter the trade, 3. you win ๐Ÿ™‚ So good luck with it.

    The technical reasons you lined up are hard to argue. I also see your fundamental view on the pair. The question I ask is if you more play the USD strength or the AUD weakness? Yesterday Huck and Pipcrawler entered also USD trades, I like actually both those trades a little better as I think the reasoning there is a bit stronger from the fundamental side. Those trades can turn bad of course but I think risk is a lot more limited.

    But this has not much to do with your idea, I think the difference is between your and my view is that your are more bearish than me on the comdolls currently. If I have chosen to go long with USD I would choose another currency rahter than AUD. For me this setup is more like a strong vs. strong currency. As I like to call it: it is a “tough call” ๐Ÿ™‚ Slightly it is though in favor of the USD I guess.

    On the other side, if you are right then you can win pretty big here as there really is a very nice retracement so if you get the direction right many hundreds of pips are waiting for you.

    Either way you choose I wish you good luck,
    FE

    • Nah, haven’t entered so far since I’m not seeing any confirmation from candlesticks or fundamentals so far. I’m also strongly biased in favor of the dollar for now but since I’m looking at commodity currencies, I just had to take my pick between the Loonie, Kiwi, and Aussie. I’m watching comdoll crosses for now though, might spot better opportunities there. Got any comdoll trades open so far?

      • ForExchange

        Hi Happy Pip,

        I counted altogether 14 running comdolls pair related trades. Where would you like to know the details? ๐Ÿ™‚
        I however have a longer perspective and want to catch more pips with a wider SL.

        My best trade is currently GBP/NZD short with 393 pips and worst is USD/CAD long with -75.

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