Watching the AUD/USD Range: Closed Early

Trade Closed: 2011-07-22 4:37
I guess risk appetite was just too strong for this technical setup! Though we saw weak economic reports from Australia yesterday, the surge in appetite was enough for the Aussie bulls to launch a fresh attack against the dollar.

As it turned out, the comdoll bulls got a boost after the euro zone leaders announced improvements in the region’s debt situation. Of course, it also doesn’t hurt that the dollar bears are busy selling the Greenback! You see, aside from printing another disappointment in initial jobless claims, more and more traders believe that a deal on the U.S. debt ceiling won’t be reached in time for Obama’s deadline today.

Unfortunately, the turn of events didn’t turn out well for my trade. After gaining by almost 50 pips, AUD/USD found support at the 1.0700 area just near Wednesday’s low. Goodness, it even shot up way beyond my stop loss!

Good thing I was able to cut my losses early. I closed the trade as soon as I saw that price broke Wednesday’s high and the top weekly ATR at 1.0768. My account took another small dent this time, but I’m pretty happy with it considering that it would’ve eventually hit my stop loss. Phew!

So sorry to break it to you friends, but we have another loss this week. A smaller one perhaps, but a loss all the same. Don’t worry, I’m not feeling to down about it since you guys have been cheering me all along. We’ll try again next week!

If you have any thoughts you’d like to share, don’t hesitate to put your two cents on the boxes below, or you can contact me through my Twitter, Facebook, and even my Comdoll Corners. All thoughts are very much appreciated!

Till this weekend for my Comdoll Weekly Replay!

Happy time

Trade Update: 2011-07-21 7:22
Hey folks! I finally picked a side on the AUD/USD range and pulled the trigger after waiting for a bit of retracement. Can you guess which side I took?

If you answered “Short at the top!” then you’re absolutely correct! Brownie points for you!

I was originally planning to short at 1.0800, right at the top of the range, but AUD/USD just didn’t make it that high. Price dropped after finding resistance at the top of its average weekly range (1.0770) just when China released disappointing PMI figures. Apparently, manufacturing conditions are starting to contract in China as the index fell from 50.1 to 48.9. Yikes!

And let’s not forget that the RBA did talk about keeping rates on hold for the rest of the year and maybe even going for a rate cut. If you didn’t get a chance to read the minutes of their latest monetary policy meeting, you probably didn’t read Pip Diddy’s daily forex fundamentals on Australia that day. Tsk tsk…

Anyway, I didn’t manage to catch the immediate reaction to the report, so I just patiently waited for a retracement to get in at a good price.

AUD/USD 15-Minute Entry

I put up some Fibs on the 15-minute chart and noticed that today’s open price was sandwiched between the 50% and 61.8% Fib levels. Plus, the 1.0750 minor psychological level was also nearby so I decided to short there.

I also adjusted my stop to 1.0825, which is 75 pips away from my short entry point. I will still be aiming for the middle and the bottom of the range for my profit targets. If the U.S. debt-cutting proposal pushes through, traders might show some love for the Greenback again and take AUD/USD all the way down to my targets. Fingers crossed!

Here are the exact details of my trade:

Short AUD/USD at 1.0750, stop loss at 1.0825, pt1 at 1.0650, pt2 at 1.0550. I’ll lock in half my winnings at the first pt and move my stop to breakeven.

Do you think this setup is finally gonna give me some pips from AUD/USD? Let me know what you think through Twitter, Facebook, my Happy Comdoll Corners, or the comment box below! There are plenty of ways for you to reach me so now is not the time to be shy!

Looking forward to hearing more of your thoughts!

Happy time

Trade Idea: 2011-07-19 7:22
Happy morning, friends!

As Clertor pointed out on my last AUD/USD trade, I really should stop getting too attached to my trade ideas. This is why I’m taking another shot at trading AUD/USD!

I know I haven’t been very lucky on this pair lately, but hey, we have to take the good setups that come our way, right?

Early today I spotted a pretty solid range on AUD/USD’s 4-hour chart. Heck, I even planned on going long on the pair! There was a bullish divergence and an oversold stochastic signal, you see. Unfortunately, price already shot up way above my potential entry point (1.0550), which was just around yesterday’s low.

AUD/USD 4-hour Range

This time around I’m thinking if I should short the pair at 1.0800. The level is not only a major psychological level, but it has also served as a good resistance area since April. In fact, there’s even a triple top near last week’s high!

It’s still early in the week though. There are still plenty of news reports that can send the pair in either direction.

On the bears’ side, there’s still the lingering risk aversion because of the euro zone’s debt crisis. Unless the euro zone officials present something concrete after their meeting later this week, we might see more risk-averse traders dump the high-yielding comdolls.

Of course, we can’t discount Australia‘s worse-than-expected news reports either. As I mentioned in my comdoll weekly replay last weekend, Australia struggled to hold on to its gains as the country was hit with lower business and consumer confidence. What’s more, the RBA just released a dovish statement! In its report, the RBA opted to use the wait-and-see approach on grounds of the “downside risk” on the global economy posed by the euro zone crisis.

On the other side of the chart, we can also take into account the dollar weakness that we’ve seen for the past few days. If heads in the U.S. Congress haven’t cooled enough to agree on the country’s debt ceiling soon, we might see traders flock to its major counterparts.

Other potential Aussie boosters include China’s strong GDP report last week, positive Australian reports this week, and even a potential risk appetite action if the euro zone leaders come up with something solid in their meeting on Thursday. Aside from that, gold just reached a new record high after successfully breaking past the $1600/ounce mark.

So, what do you think of my trade idea? If you’re trading this pair, which way would you go?

Don’t be afraid to share your thoughts with us! I promise I appreciate all of them! But if you’re too shy on sharing your two cents, then you can give me a shoutout on my Twitter and Facebook accounts, and even on one of my Comdoll Corners.

Looking forward to hearing your thoughts!

Happy time

  • Newguy

    I’m looking for long setups myself.  Will “risk adversion” eventually mean avoid US?

    • happypip

      Hey Newguy!

      I was thinking “risk aversion” could mean flight away from high-yielding currencies and into the safe-haven dollar, but that’s just me. What do you think? :)

      • Newguy

        Of course, that’s the current thinking.  Just wondering if the US will loose enough credibility with the budget impass and economy if it would loose its “safe haven” status.  It seems there are other countries, such as Austrailia and China that are doing well economically relative to the US and have high yields to boot!

  • Foricks

    WOW, Great minds think alike.  I saw this channel at 1:30 this morning and took it long for 40+ pips.  After the TP, I couldn’t resist jumping back in after it broke hard through the 1.07 threshold (and 89MA on 4hr).  I am content watching the balance of this trade evolve over time as the debt debate/debacle plays out with a second TP around 1.0760.  Also keeping a sharp eye on gold for any movement to the downside.

    • happypip

      Glad to know someone else is watching this trade with me! Looks like you’re about to hit your PT within the next few hours! Are you looking at shorting it when it hits resistance? :)

      • Foricks

        Didn’t quite hit the numbers I had hoped.  I am seeing a bearish engulfing ‘stick and a macd round top on the 4 hr (Noon, EST)that may disqualify my long order.  A wise trader would close out the last part of his 4 part trade at a small loss (I bought in yesterday for a net +79 pips). That wise trader would then jump in to the downside.  Man, I wish I were wiser, but gold is retesting 1600 just now, so I may have to hold out until the 1600hr candle.

  • clertor

    I wanted to add something else. I’m long on the Aussie long term (weekly chart), so if this range gets broken now, I expect this pair to continue climbing. If it does break, my idea would be to wait for a bounce of the resistance-turned-support and the target would be something like the size of the range it just broke. THe stop loss would be below the 1.08 region. Again, another high RR ratio setup if you wait for confirmation.
    I know it’s another setup altogether. Hope you don’t mind.
    Cheers
    Clertor

    • happypip

      Once again, thanks for your suggestions clertor!

      Don’t worry, I’ll try to put tight stops if I decide to trade this pair, and I’ll even divide my positions so I can take away some of it near the levels that you mentioned. Still watching fundamentals though. :)

  • Newguy

    It seems the US stock market is pricing in a debt deal.  Would raising the debt ceiling be bullish or bearish for the US Dollar?

  • ANIROODH

    Hi Happypip
    have you observed in D1 time frame symmetrical triangle is forming and i think by close of today if a strong bullish candle is formed I am thinking of going long for a target of 1.10 or even more
    ani

  • Dean FX Paul

    Well done, you got into the trade. Forgot to mention, holding AUDUSD for long periods (as I tend to) can get expensive due to carry trade interest.. but for short periods, no probs.. 

  • Dean FX Paul

    Betting on China and commodities right now seems riskier than going with the bears on the downside (Europe & US). I’m guessing it will tank around 1.08 as well. I’m not in AUD right now, but if I were, I wouldn’t be buying again until around 1.05 or lower..
    Looks like you will get your 1.08 sell shortly.. it’s sitting around 1.0750 right now.

  • clertor

    Hi guys,
    As I said before I’m not very good with fundamentals. But from a TA point of view I like your idea comdolls. AS a matter of fact I was following a channel on this pair on the daily.
    I would wait for a bounce of the top of the channel, maybe even a retraction before going short. what you don’t have on your charts are the pivot points, and the weekly R1 aligns almost perfectly with the top of the channel (1.07787). Remember that you don’t need to put your stop loss too far out, just above the last high I think would do. If you break the channel and get stopped it’s OK, you don’t loose much. Your RR ratio should be big anyway.
    One last thing, If you take the short, be careful that at 1.067 to 1.063 there is the weekly central PP and the 200 EMA so you may want to take some profit off the table.
    good luck!!!