Shorting AUD/USD at the Top of the Channel – Trade Closed

Trade Closed: 2011-12-09

And just like that, my second position got stopped out… at breakeven, of course!

As Forex Gump mentioned in his entry discussing the EU Summit details, traders initially rejoiced when the European leaders announced their new budget plans and the early launch of the ESM bailout funds. This was enough to push AUD/USD out of its weekly range and trigger my stop.

AUD/USD Closed Trade

However, the rally faded in a jiffy as traders realized that the newly unveiled plans for the EU probably won’t be enough to keep the crisis contained. Besides, the U.K. rejected these proposals, which means that the EU cannot enforce the rules on all its member nations just yet. With that, AUD/USD tumbled all the way down to the 1.0050 area.

I know I could’ve made so much more on this trade, but I’m happy with how I managed my risk. As I mentioned in my Comdoll Weekly Replay, I would’ve gotten stopped out anyway if I kept the second half of my trade open without adjusting my stop loss. If that happened, I would’ve erased my profits from this trade completely!

But I thank my lucky stars that I was able to make the right decision. Here’s how my short AUD/USD trade turned out:

P/L: +50 pips / +0.35%

I’m sure you have a ton of suggestions on how I could catch more pips so don’t hesitate to drop a comment below or holler at me through any of these accounts:

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Chips, dips, and I look forward to your tips!

Happy time

Trade Update: 2011-12-08 8:56

Time to lock in some pips! Looks like it’s going to take more than a couple of disappointing economic reports from Australia to rain on the Aussie bulls’ parade!

A few hours ago we saw AUD/USD plunge below 1.0250 when Australia released its employment reports. Not only did the country’s unemployment rate rise to rise to 5.3%, the number of employed actually decreased by 6,300 in November!

Unfortunately for my trade, the bearish report wasn’t enough to firmly place AUD/USD below the 1.0250 mid-range support. The pair bounced off the minor psychological handle, and even went back to near my original entry area a few times!

AUD/USD Trade Adjustments

Since 1.0250 was holding like a boss, I decided to tweak my trade plan. I closed my first position at the 1.0250 support when it was retested a couple of heartbeats ago, and then I moved the stop of my second position to break even.

What do you think of my new plan? Should I have closed my second position early, or should I wait for the pair to break 1.0250? As always, your thoughts are much appreciated!

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Just keep pippin’! Just keep pippin’!

Happy time

Trade Idea: 2011-12-07 00:57

Ho hum, it looks like most pairs are consolidating lately and I just can’t resist this opportunity to play the AUD/USD range. As Big Pippin pointed out in today’s chart art, the pair has been stuck between support at 1.0150 and resistance at 1.0300. Stochastic is already lingering at the overbought zone, suggesting that Aussie bears are ready to pounce. But, until the oscillator crosses downwards, the bulls could still take the pair up to the top of its current range.

AUD/USD Channel

You might be wondering why I have a bearish bias on the Aussie. Well, wonder no more! You see, the RBA just cut rates by 0.25% this week, bringing their benchmark rate from 4.50% to 4.25%. If you’ve been keeping track of the RBA rate decisions, you’d know that this was their second rate cut this year, as the central bank continued to worry about persistent global economic threats.

Besides, there’s still a lot of uncertainty in the markets as traders await the outcome of the EU Summit on Thursday. With that, the markets would probably be in for a lot of sideways movement until then unless we see any huge shifts in market sentiment.

Here’s my trade idea:

Short AUD/USD at 1.0300
SL at 1.0340,
PT1 at 1.0200,
PT2 to be determined

I’ll be risking 0.75% of my account on this trade and I’ll be moving my stop on the rest of my position to breakeven once my first target gets hit. I’ll keep the remaining half open and cross my fingers that this pair goes all the way down to parity or lower. Hey, those gaps still need to get filled!

What do you think of my trade idea? Will I catch another win with AUD/USD? I’d love to hear your thoughts so send ‘em through any of these accounts:

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Chips, dips, and give Happy Pip those pips!

Happy time

  • Caduceus

    S&P/ASX200 has been dropping significantly the past 6 hours. However, the drop in the AUDUSD is not as drastic. Probably because of the fairly good Aussie data yesterday. I’m assuming that there are a lot of buyers currently in the AUDUSD since its current drop doesn’t reflect the Aussie futures drop. Unless some bad news comes out of Europe, I’m expecting a break of the 1.0300 level.

    • Caduceus

      I’m currently long because I’m honoring the carry trade coupled with the economic data from yesterday. I have my eyes on the 1.0330 level and I’ll see what the Aussie futures do at this level and listen for any Europe developments to decide whether or not I want to stay in the trade just below the R3 pivot ~1.0390. If new positive news comes out prior to this, I’m still long. However, if negative news comes out, all bets are off and I’ll flip my position to go short AUDUSD.

      • Caduceus

        AUDUSD take profit hit. After the spike up to 1.0360 I’m now short. Aussie futures are moving against the US futures after the jobless claims rally…looks like clear fundamental divergence to me. I’m back to riding this down to ~1.0210. I believe that this was only a temporary rally. Reality will set back in that Europe is in trouble and the Aussie market knows this.

        • Caduceus

          And there it is ladies and gentlemen…time to close out this beautiful set up. Happy trading to all!

  • Jānis Pusplatais

    :) Just spotted this trade by myself and ka-pow it’s already here!

  • Reza

    Sl hit at the top of the channel and price returned

  • Matt

    I was stopped by that candle as well, I think I was 6 pips too tight, spewing…

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  • wooo

    Watch it slide all the way to parity and beyond! Word is the RBA will cut the cash rate by another .25% in the first quarter of 2012

    • happypip

      Oooh, really? I’m really hoping this pair falls back to parity. *fingers crossed*

  • forexnoob

    basically, i like your idea..coz been eyeing that too..:)..cheers girl

    • happypip

      Thanks! Good luck with your trade too! :)

  • pipVader

    This looked good to me too so I got in at 1.0285. Thanks for drawing my attention to the setup Happy!

    • happypip

      So far, it’s looking good! Eep, I hope I didn’t jinx it. Good luck to both of us :)

  • Harpe

    Happy-pips, great job! Now you can setup your PT2.

  • Jānis Pusplatais

    Thats it, my S/L has been hit :D

  • Richard Soutar

    It’s cooking!

    • happypip

      Heck yeah! Did you trade this pair too?