I really hoped that this trade would bring my account back in the green, especially when I saw that AUD/USD bounced by more than 50 pips from my entry. Even though it dipped to the 1.0800 handle the next day, I kept my fingers crossed when I noticed that stochastic was starting to climb.
Curse those weak reports from the U.K. and euro zone! The U.K. kept releasing one disappointing PMI figure after another, causing many traders to think that the economic rebound is losing steam. Combine that with dovish comments from the ECB and risk aversion came back in full swing!
In retrospect, I probably should’ve taken it easy with my bullish AUD/USD bias when my past AUD/USD long trades didn’t work out so well. I guess I should’ve taken those as signs that a reversal was brewing. Silly old me!
Anyway, here’s how it turned out:
P/L: -80 pips / -1.0%
Ah well, my account is down in the dumps again. Thankfully I got you guys to cheer me up! I really appreciate how most of you make the effort to give feedback on my trade ideas, share your own trade setups, and even offer a kind word or two to make me feel better. Keep ’em coming!
Trade Idea: 2011-05-04 8:09
Just like the new Black Eyed Peas beat, I just can’t get enough of the Aussie! After my trailing stop got hit on my last AUD/USD trade, I’m back with another long trade idea! Watcha think of this one?
As we all know, the dollar has been gaining a lot against its counterparts since Monday when the U.S. killed the number one bad guy in the world (yay for the Navy Seals!) Unfortunately for the Aussie, a strong Greenback means weaker commodities like gold, silver, and oil.
But like an American Idol fan who just won’t stop trying to be famous every season, I’m also not giving up on the Aussie just yet! As Forex Gump wrote on his Osama and the Dollah article, the underlying fundamentals for the dollar hasn’t changed since Monday. The Fed is still as dovish as ever, while the RBA is being tight-lipped about the future of its interest rates.
On the technical side, a lot of nice guys on my Twitter and Facebook accounts have been confirming my thoughts that we’re seeing a pullback on AUD/USD this week. Though AUD/USD has been showing a strong downside movement, the pair hasn’t broken the rising trendline that I drew a couple of days ago. In fact, it’s currently dancing around the 1.0850 level, which is the support of my rising trendline on the daily chart.
Speaking of 1.0850, that’s exactly where I entered my trade yesterday! I thought I could get a bargain on AUD/USD when it was falling, so I set my order at 1.0850 because I saw a possible support at the minor psychological handle. Oh, and it helped that Stochastic was in the oversold region at the time, and a bullish divergence was also popping up.
My trade is down by a couple of pips right now (huhuhu) but I hope that the pair reverses before it hits my stop loss!
For this trade, I risked 1% at 1.0850 and initially put my stop loss at 1.0750 (my trailing stop is now at 1.0770). Last but not the least, I plan on taking profit at the week’s open price near last week’s high (1.0970).
I’m a lil’ bit unsure if I should cut my losses now, so a few tips is most welcome!