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What a good trading week! Our ascending triangle setup worked like a charm!

Thanks to speeches by central bankers yesterday, traders largely ignored the ridiculously rapid climb of European bond yields.

As it turned out, central bankers and government officials from the eurozone, the U.S., Japan, and even some representatives from the G20 hinted that a coordinated intervention is on the table in case of a liquidity crisis following the Greek elections. When you have “coordinated intervention” in the works, who needs QE3-friendly speeches?

Despite the attempt at inspiring confidence though, I have decided to close my position ahead of the Greek elections. See, my instincts are telling me that chart patterns will hardly matter if the Greek elections turn out as chaotic as many are preparing for.

AUD/USD Trade Closed

That said, I’m happy to share that I closed my trade at 1.0017 for a 68-pip win and a 0.70% boost on my account. Not bad for a few hours’ worth of trading, eh?

I could’ve extended my gains, of course. AUD/USD did break above parity after all. But right now I’m deciding not to push my luck. Do you think this is the best decision? How could you have traded the pair better if you were in my position?

Looking forward to your tips!

Trade Idea: 2012-06-14 3:48

Word on the street is that weak U.S. data could push the Fed to announce QE3 next week so I’ll be buying that rumor with my AUD/USD long trade.

You see, the U.S. just released a disappointing retail sales figure for May, printing its second monthly consecutive decline and confirming that households aren’t really in a spending mood these days.

AUD/USD Triangle Play

The possibility of more easing from the Fed could lead to a spike in inflation, which explains why traders are scurrying to buy gold and other precious metals for the past couple of days.

Since gold acts as a hedge against inflation and the Aussie is positively correlated to gold prices, AUD/USD could draw further support from the commodity price rally.

As for technicals, I’m keeping a close eye on this ascending triangle on AUD/USD’s 1-hour time frame. The pair is sitting right at the rising trend line or bottom of the triangle just as stochastic crawled out of the oversold zone.

With the pair making higher lows and about to make its fourth test of parity, I figured that Aussie bulls are gathering momentum for a potential upside breakout.

However, I remembered that the Greek elections are coming up this weekend and I plan to limit my risk prior to that event. Depending on price action, I’d probably adjust my stops before the end of the week and just re-enter my trade on Monday open if the elections turn out positive for risk sentiment.

If QE3 talks are still on the newswires early next week, I might start thinking of doing a 50/1/1 STA strategy on this trade. Ain’t nothing wrong with pressing my advantage, right?

Here’s my trade idea:

Buy AUD/USD at market (.9950), stop loss near .9900, first PT at 1.0000

I plan to move my stop to entry before the end of the week and probably set my STA orders if QE3 is still on the table next week.

As always, I’ll risk 0.5% of my account on this setup. Make sure you check out our risk disclosure if you’re planning to join me on this one. And don’t hesitate to give me a heads up if you’ve got some other thoughts on this pair!

Looking forward to hearing from you,

Happy time

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