Short AUD/JPY Swing Trade Idea – Trade Canceled

Trade Canceled: 2011-08-09 3:14

Boo hoo! So much for trying to play the comdoll crosses. My trade idea was quickly invalidated as AUD/JPY failed to reach the top of the channel I drew. Instead, it just dropped like a rock and I didn’t even get a chance to jump in.

Blame it on the strong risk aversion vibes we got last week. The Australian dollar couldn’t put up a fight since it was bogged down by dovish RBA rhetoric and weak data from the Land Down Under. All that made AUD/JPY go down under!

AUD/JPY Descending Channel...not

I probably should’ve just jumped in when I saw the 85.00 handle hold as resistance before the pair plummeted. Or I could’ve entered when it broke below the channel. Too bad it’s right below 80.00 now, and I could’ve made at least 500 pips on a short AUD/JPY trade.

But hey, that ain’t so bad for giving crosses a shot! I did get the overall direction right, didn’t I?

Don’t worry, I’ve got a brand-spankin’ new comdoll trade idea for this week! I’ll keep y’all posted!

Happy time

Trade Idea: 2011-08-04 8:06

Good morning, friends!

As I hinted in my Playing with Comdolls Facebook page earlier this week, I wanna try my hand in playing the commodity crosses this time. You see, I haven’t had much luck trading the usual AUD/USD, USD/CAD, and NZD/USD pairs lately so I tried to look for setups in other comdoll pairs.

Since the dollar’s price action had been pretty crazy lately, I decided to take a look at some of my favorite comdoll crosses this week.

Fundamentally I’m still bearish on the Aussie for the next couple of days. And why not? Aside from risk aversion plaguing the markets, Australia had also been popping out worse-than-expected building permits, retail sales, and trade balance figures over the last few days. Heck, even the RBA was dovish in its last interest rate statement!

As for the yen, I believe that it will go back to rising against almost all of its counterparts as soon as the BOJ intervention begins losing steam. After all, nothing much has changed fundamentally for many economies. Unless the NFP report this Friday surprises to the upside, that is.

Because of my fundamental bias, I decided to look for a trade on AUD/JPY. Et voila! On AUD/JPY’s 4-hour chart I spotted a descending channel which held up nicely in time for the BOJ‘s currency intervention a few hours ago. I decided to place a short order at the 87.00 level because I figured that’s a pretty good resistance level for the pair.

AUD/JPY Descending Channel

I’ll be flexible on my entry level though. Hey, I’m still stretching my muscles on trading comdoll crosses! If stochastic on the 4-hour chart reaches the overbought region, I’m willing to move my entry to 86.00 and place a 100-pip stop on it. In addition, I’ll be placing my first profit target at the 84.00 support while I determine my next profit target. If price goes my way and reaches 84.00, I’ll close half my position and try to ride the downtrend.

So what do you think of my trade idea? Is trading crosses really a better idea at this time, or should I stick to the Greenback? Should I move my entry or stop?

Tips, words of caution, and pieces of advice are always welcome, of course! Just leave a message on the boxes below. If you want you can also contact me through my Twitter account or even on one of my Comdoll Corners.

Looking forward to hearing your thoughts!

Happy time

  • Mikausa2004

    Hello ComDolls,
     I see a double bottom on the daily chart of usd/cad. what do you think? I see a 400 pips up .

    • happypip

      Looks good! I’ll probably wait for a break above .9900 though, since the area was a pretty significant level a few weeks ago. Oh, and last Friday’s candle also looks suspicious…. What profit level are you targeting? :D

  • PipHur

    It looks very interesting, but a 100 pip stop seems to be a little wide.. Have you perhaps considered keeping your stops somewhat tighter, and trying to re-enter a position later on if conditions still seem to be going your way (for example 2 x 50, or 3 x 33)? Of course, this is not to say that it works for everyone, but if I’m off by 50 pips, it usually requires a reassessment of the circumstances: if markets move my way, great I’ll in again, but if not my losses remain limited (keep bets small principle). 
    With the risk of sounding preachy (and being wrong), it’s possible that the BoJ will attempt to keep the Yen volatile for the time being (in the coming weeks or maybe even longer), just to hit stops and keep speculators on their tows (maybe even coordinate intervention). This can make trading the JPY risky, so that might also warrant tighter stops. 

    • happypip

      Eep, I’m not so used to trading crosses so I thought a wide stop would be safe, knowing how they’re much more volatile than the majors. But you’re right, it looks like the BOJ is set to intervene again! 

  • Lorenzo Gonzalez

    Thank you so much for this website, im currently a beginner to trading and im looking forward to learn in the right path.  i value the time and effort to put up this site and maintain the interest and the care to teach others. today was checking the AUD/JPY this morning, tried making my analysis and went long on it. right now P/L is 1,700 and vie been trying to sell on my paper trading account.. but the order just doesn’t get filled, im using TDameritrade Thinkorswims , thought if it was a live account with my little money i would had bought 10,000 instead of the 100,000 i bought this morning… cant afford that risk for real yet…. anyways… best regards!

    • happypip

      Hahaha, better safe than sorry, as I always say! At least your trade idea was right. Of course it’s always good to practice proper risk management, too. Keep it up!

  • Foricks

    Hey, Happy, I personally stay away from the Yen but only due to some scary experiences I had when I first started trading.  I found it to be very volatile, so your 100 pip stop makes sense.  Just be cautious of the roll costs on these two.  It can add up.
    Cheers,
    Foricks

    • happypip

      Thanks for the feedback, @4b5a7b75e64d3af94c8cd6b43fb84b04:disqus ! I reminded myself that these yen pairs tend to be more volatile than the rest so I had to make room with wider stops. I missed this trade though :(

  • Hanns Groeschke

    Hi! The technical analysis is great and seems to work out fine. I hope you did make a hit and run! The PA on AUDJPA will be as crazy as EU. Japanese intervention, USD risk aversion and the Australian weak economic outlook makes the pair unpredictable…at least long term.