Trading the Aussie AND the Kiwi – Another Trade Update

Another Trade Update: 2011-09-08 07:40

After closing my NZD/USD day trade yesterday, I’m now looking to trade my swing trade setup. Yesterday I pointed out a possible tweezer bottom on the pair’s daily chart with gold‘s safe-haven status as the main fundamental support.

But now that Australia’s employment reports surprisingly showed weak numbers, I’m thinking if I should switch to the bear camp… or see it as an opportunity to buy.

Right now it looks like risk is still on in the markets, with AUD/USD bouncing up from its post-employment report lows. The question is, will the pair continue on its way up, or will I have a chance to enter at a possible support at 1.0550?

AUD/USD Swing Trade Update

I’m thinking Stochastic is still in the overbought region, and the bears might be attracted to the 50% Fib at the minor psychological level. But if the pair is done retracing its move, then I can always enter at market, aim for 1.0750, and then put my stop below the support that I pointed out.

What do you think? Should I trade this setup? You can reach me at one of the links below if you have any tips, advice, or questions for me.

@Happy_pip Twitter
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Trade Update: 2011-09-08 21:10

Aww, what a bummer! My short NZD/USD day trade got stopped out as risk appetite improved yesterday. Price busted through the Fibs I drew and ended up hitting my adjusted stop loss around .8310.

NZD/USD Day Trade Update

In retrospect, I probably should’ve been much more patient with my entry. You see, I was already watching the price tick down from the 38.2% Fib, which was why I decided to enter at market. I should’ve waited to short at the .8300 handle instead, which would enable me to set my stop a bit higher and give the trade more breathing room.

Instead I ended up with a 0.5% dent on my account and another blow to my confidence.

Oh well, I still have my long AUD/USD swing trade idea. Do you guys think I should go for it? As I mentioned in my trade idea, I plan to wait for the Australian jobs data to be released first and I’ll decide to pull the trigger if the actual figure is better than expected. Let me know what you think and I’ll keep you posted!

@Happy_pip Twitter
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Trade Ideas: 2011-09-07 5:36

Day Trade: Short NZD/USD

I know, I know. According to the results of my “Which Trading Style is Best for You?” personality quiz, I should focus more on swing trades. But my, oh my, this NZD/USD day trade setup was just too yummy to ignore!

The pair is on a strong downtrend since last week as risk aversion continued to loom over the markets. With absolutely no reports on New Zealand‘s schedule for the rest of the week, I’m thinking this pair would simply continue its trend. I put up the Fibonacci tool on the latest drop and noticed that the 38.2% Fib lines up with a broken support level. To top it all off, that’s also the top of today’s average daily range!

NZD/USD Day Trade

But that’s not the best part yet. Making this trade even sweeter is the bearish divergence on the pair’s recent highs. Stochastic was already about to cross so I just went for it and sold at market. I risked 0.5% of my account on this trade and set my stop above the .8300 major psychological level. Since this is just a day trade, I’ll be going for a 1:1 reward-to-risk ratio and aim for the pair’s recent lows just above .8200.

Swing Trade: Long AUD/USD

And now for my swing trade idea! With the SNB basically preventing traders from gobbling up the franc and the state of the Japanese and the U.S. economies putting a cap at the dollar and the yen’s gains, it seems that gold is the only true safe haven out there.

You know what that means – possible gains for the gold-related Aussie! Of course, it also helps that Australia’s GDP released a couple of hours ago revealed a 1.2% increase in the second quarter when my trader friends only saw a 1.0% growth.

AUD/USD Swing Trade Setup

With those fundamental factors in mind, I’m finding my AUD/USD setup more and more irresistible. On the pair’s daily chart the pair seems to be supported by a rising trendline, and it looks like the pair just bounced from the 61.8% Fib at 1.0500. The cherry on top of this setup is the possible tweezer bottoms. The last time it showed a similar setup back in August 25 the pair rose above the 1.0700 handle!

I still have to be careful on this one though. 1.0600 could still become a support-turned-resistance level for the pair, and risk aversion could still hit the markets.

So, what do you think of my trade ideas? Are you in on any of these with me? I still don’t know where to enter my AUD/USD setup so a few tips will be much appreciated! Here’s where you can reach me:

@Happy_pip Twitter
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  • Digitalgypsy5720

    I got in on the AUDUSD 😉  Nice setups!!  Good luck :-)

    • happypip

      Yay good for you! Where did you enter? I’m still looking for an entry level. Looks like it’s encountering resistance at 1.0620…

  • Forex Vendetta

    Def with you hun! Although I’m shorting Euro but they generally move in the same direction, good luck! :)

    • happypip

      Thanks! Slipped a bit on my first trade idea, but I’m now looking for an entry in AUD. Good luck on your euro trade! :)

  • Schnitzel

    Im just a newb, but aren’t NZD/USD and AUD/USD usually very connected? Because going long on one and short on the other would be an antagonism if so..

    • happypip

      You’re right, Schnitzel! AUD and NZD do tend to move in the same direction.
      I’m generally bullish on the comdolls, but I thought that I could get away with shorting NZD as a day trade because of yesterday’s risk aversion and NZD/USD’s intraday short setup. Too bad those reasons weren’t enough this time around. :(

  • Marshall Clarke

    I am liking the NZD/USD trade. I attached a Daily and a 1hr chart.

    The Daily shows a strong bear move in the beginning of August followed by a retracement up to the dual 61.8% Fib and .8500 Resistance where price reversed. The Daily is now heading towards short term support near .8160 represented by the blue line.

    The 1hr chart shows 2 key resistance zones at .8310 and .8325 and as expected price has reversed towards the 50% and 61.8% Fib where price formed an indecision candle which was soon followed by a large entry candle.

    The trade was entered after the close of the candle at .8279 and a stoploss was placed 3 pips above the .8325 Resistance level at .8328.

    The profit target is the blue minor support line from the daily chart which being at .8160 offers a 119 pip reward for our 51 pip risk. 1:2 sounds good to me!

    • Marshall Clarke

      Trade was stopped out but with bearish correlation pressure from the Aussie a Kiwi short is looking more attractive.

      The 1hr Kiwi has currently formed multiple indecision candles near the weak .8340 resistance but it is also still below the 78.6% retracement line making a short entry valid.

      I will be waiting for a very clear signal for entry or none at all. A decisive confirmation candle or 3 medium down-candles might be a good entry.

      • Marshall Clarke

        A big hanging man has formed on the 1hr Kiwi indicating bearish momentum.

        I am still waiting for my entry confirmation however now I will wait for a confirmation that closes BELOW the hanging man low of .8311 to confirm this reversal. Just a way to make the signal ‘extra’ clear.

        • Marshall Clarke

          Many indecision candles, hanging man’s actually, are now forming a very clear bearish psychology.

          Awaiting a decent sized closed bear candle for entry…

          • happypip

            Looks like Stochastic is still in the overbought region and NZD is still hitting minor resistance at .8340. Watching this one with you, my friend :)

          • Mario Tan

            Looking at the daily chart of NZD/USD, it’s about to form a head and shoulder.. It’s safer to go short after the shoulder has been fully formed.

          • Marshall Clarke

            Nice spot Mario!! Good eye!

  • Marshall Clarke

    I am feeling iffy about the AUD/USD trade. You have a strong fundamental support which I admire however I am still feeling a bit bearish.  I attached a 1hr and Daily chart.

    On the Daily there was a big move down in August followed by the retracement we are currently involved in. Price hit the 1.0775 resistance which was strengthened by the 78.6% Fib and has started making it’s way towards the minor support (shown in blue) near 1.0420

    On the 1hr I see two important resistance lines at 1.0650 and 1.0680 with the 61.8% Fib inbetween. I will be looking out for one or a series of indecision candles followed by a confirmation candle.

    Another resistance level of 1.0725 offers a good place for a stop. A good stop might be around 1.0730 – 1.0740.

    If we expect price to continue towards the blue minor support line from the daily chart we can foresee a VERY high risk:reward ratio for this trade.

    • Marshall Clarke

      The software didn’t attach the AUD/USD charts properly… the 1hr made it but the Daily chart got replaced by two NZD charts instead. Ignore those! :)

    • Marshall Clarke

      I made it in short this trade at the 1hr candle-close of 1.0638

      The entry was made RIGHT AT the 61.8% Fib and 1.0650 resistance, the very bottom of our Entry Zone. Because of this the 1.0680 resistance acted as my Stop Zone and I ended up placing my stop at 1.0707 which is above the 1.7 psych level and 71.8% fib.

      Profit target is still around 1.0420 so that leaves us with a 1:3 risk reward ratio. Esta bien!

      • Marshall Clarke

        After the HUGE bearish candle I moved my stop to the short-term 61.8% Fib created by that large candle. This was about +3 pips from break even.

        I was stopped out for a glorious sum of +3 pips!!

        Rigid risk aversion using this type of money management helps minimize losses and lock in gains! Better to break even on a trade that may turn to your favor then to loose 50 pips on a bad trade.

        Sometimes after a break-even stop is activated another entry signal emerges in our direction. I’ll be looking out for this on the AUD/USD. Until the 1hr shows some serious signs of weakness I won’t be going short. These signs include one or more of the following: Lower Lows &  Lower Highs, many indecesion candles followed by a confirmation candle, or a double-top or tripple-top setup.

        Price is still hovering around our “Entry Zone” so I will be keeping an eye on this trade.

  • Mario Tan

    Thanks for the tip.. :) 
    However, it seems that the weekly trendline support has been broken already last 07.31.2011. It’s possible that the price will go up to retest the support and might go down again.

  • ltnewbie

    I was in a long trade earlier, but then I got this drawing and I went short when I so the bearish candle closing on a 61.8 Fib level and with stochastic overbought.I have to admit that the news helped me a bit so far:) 

  • Digitalgypsy5720

    Im kinda skeptical now about AUDUSD after being stopped out twice this morning and yesterday too lol.  I actually went long on NZDUSD last night and picked up a few pips.  So if the aussie retraces back to the 50% fib and it shows oversold then I’M IN!!  Im skeptical but i didnt give up 😉  Let’s do this!!!