Forex Trade Review: Short EUR/AUD

Alas! I got stopped out on my EUR/AUD short faster than I could say “weak Australian CPI”!

Trade Idea: Waiting for  Chance to Short EUR/AUD

Trade Update: Chance to Short EUR/AUD

As you can see from the chart below, the pair made a sharp upside break when the quarterly Australian CPI figure was released. The actual report showed a 0.6% increase in price levels, slower than the estimated 0.8% rise. As Forex Gump mentioned in his article on what the weak Australia CPI means for RBA policy and the AUD, subdued inflationary pressures could lessen the pressure on the Australian central bank to hike rates in the coming months.

EUR/AUD 4-hour Forex Chart

EUR/AUD 4-hour Forex Chart

Never mind that euro zone PMI readings also showed signs of weakness! Aussie bulls were far too disappointed with Australia’s bleak CPI figure that they pushed EUR/AUD all the way up to the 1.4900 mark, hitting my stop at 1.4850 along the way.

With that, I chalked up a 0.5% dent on my account and a 100-pip loss. Too bad it erased most of the gains I scored on my NZD/CHF long trade earlier this quarter! So now I’m back to square one, hoping to snag a really good win in trading commodity currencies. Got any ideas you’d like to share?

Happy time

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  • rwc5078

    I have a trade Idea. It is the AUD/USD on a daily chart.

    Long Entry around .9275

    Stop just below .9200 (Previous low and a FIB support level from .97 [OCT 2013] to .87 [JAN 2014])

    Initial Limit at .9450. (Around Previous High)

    My problem is that I cannot find any useful technical indicator telling me when to enter this position. I am only using two trend lines acting as support

    First Trend line starts in early Jan 2014 and follows the trend upward.

    The Second Trend line acts as support in AUG 2013 at .8850. Support again in SEPT 2013 at .8900. Support again in DEC 2013 at .9000. Resistance in Jan 2014 at .9500 and finally as support for my long entry into the position.

    Do you have any advice/comments on my reasoning to enter the trade?

    Do you have any reasons why I should (or should not) enter this trade that have not already been mentioned?

    • Happy Pip

      Thanks for sharing your trade idea! I’m just feeling a little cautious about an AUD long now that inflation has come in much weaker than expected, then again it could be a good idea to short USD this week since there are plenty of top-tier reports due from the US economy. If you’re not comfortable about trading with major events lined up, then that could be a reason to not enter this trade. But if you are confident that these could be dollar-bearish, then it could be a reason to go long AUD/USD. Any forecasts for this week’s set of catalysts?

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