I’ve got something to confess, forex friends… I already entered this short trade at market! Here are the reasons that convinced me to hop in right away:
- U.K. Nov manufacturing production down by 0.4% vs. +0.1% forecast
- U.K. Nov industrial production down by 0.7% vs. 0.0% forecast
- Chinese trade surplus widened from 343B CNY to 382B CNY in Dec
- Chinese exports up by 2.3% y/y vs. -4.1% estimate
- Chinese imports down by 4.0% vs. -7.9% estimate
These recent economic releases were actually enough to give GBP/AUD more downside momentum, leading me to think that it might not reach my original entry at 2.1000 anytime soon. Then again, with all the event risks such as the AU jobs release and BOE statement lined up, there still might be enough volatility for a pop higher so I left a sell limit order for 0.25% risk at 2.1000 then got in with another 0.25% position at 2.0610.
At the moment, my reward-to-risk ratio ain’t looking too good with a wide 700-pip stop and a 600-pip profit target, but I’ll be ready to add to my short position if BOE Governor Carney and his gang of policymakers sound even more downbeat this week. I’ll also be on the lookout for the AU jobs report and for any potential changes in market sentiment.
For now, here’s what I’ve got:
Shorted GBP/AUD at 2.0610 (0.25% risk), sell limit order at 2.1000 (0.25% risk), stop loss at 2.1300, profit target at 2.0000. If you’re thinking of joining me, make sure you check out our risk disclosure first!
Do you think it was a good idea for me to hop in at market or should I have stayed patient in waiting for a test of 2.1000? As always, I’d appreciate your feedback on my forex trades!
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