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Closed Early: 2011-03-02 10:35

AUD/USD symmetrical triangle breakout

AUD/USD broke up from its symmetrical triangle! What’s more, it only went a few pips above my stop loss before it went back down! Is a tight stop loss my only problem, or am I doing something else wrong? Help!

A few days ago I shorted this pair because of the symmetrical triangle on the 4-hour chart, as well as the grim reports from both New Zealand and Australia. Too bad that markets weren’t dancing to the same beat!

Market sentiment began to turn around just as I entered the trade, with mixed reports in the U.S. sparking crazy waves of anti-dollar vibes. While U.S. jobless claims improved to 391,000 last week, GDP in the U.S. also dropped to 2.8% in the fourth quarter. The dollar bears were practically raising their glasses! Oh wait, that was Pink’s song…

How could I have played this trade better?

For starters, I could’ve placed my stop loss a bit above the 1.0200 handle. The previous high and symmetrical triangle might be pretty good resistance lines, but I could’ve added extra protection by placing my stop above the psychological level.

I also noticed that I could’ve closed the trade earlier when a candle closed above the symmetrical triangle. Better yet, I could’ve closed my trade when the U.S. GDP printed worse-than-expected. *sigh*

Here’s the damage on my account:

P/L: -45 pips / -0.6%

Boo hoo! I’m feeling a little down right now since my last two trades ended up as losers. I do hope I can bounce back soon! In fact, I’m opening another position on this pair, but on the other side of the pip-fence this time! What do you think?

Trade Idea: 2011-02-24 10:10

With all the chaos in the Middle East and an earthquake’s damages to New Zealand, risk aversion is still setting the beat in markets. A few days ago, I thought that rising price levels would have a positive impact on commodity-dependent economies. But now, I’m starting to think that inflation is taking its toll on them too.

In particular, Australian reports that recently came out way worse than expected. Business confidence slipped from an index number of 9 to 5 in the last quarter of 2010, signaling that businessmen aren’t so confident with their outlook for the Australian economy. Heck, even RBA Governor Glenn Stevens himself isn’t so gung-ho about Australia’s recovery either! In his speech this week, he pointed out that China’s move to a more prudent monetary policy could place a huge dent in Australia’s GDP.

Aside from that, construction work done and private capital expenditure fell short of expectations, which hints that progress in the Land Down Under is beginning to slow down. No other reports are due from Australia until the end of this week, but I’d have to keep my eyes and ears peeled for their set of red flag data due next week. It looks like I’ll have to cut down on my shindigs then!

This coming Tuesday the RBA will release its monetary policy decision, and many expect its interest rates to chill at 4.75%. I’ll be listening intently to the accompanying statement and paying attention to the retail sales and current account figures that will be released earlier on.

Their GDP for the last quarter of 2010 is also due the next day and any signs of a slowdown could bring AUD/USD crashing down. Then, building approvals and trade balance data are due the next day. Phew!

As I mentioned in my earlier posts, I’ll be keeping a close watch on these economic releases to know whether I should exit my trade early or keep holding on. Of course, I’ll be paying attention to the technical signals as well.

AUD/USD symmetrical triangle

As foricks commented on my last post, there’s a symmetrical triangle on AUD/USD’s 4-hour chart and, judging from the climbing Stochastic, Aussie bulls could still push this pair up. I splashed some Fibs on the recent drop and noticed that the 61.8% Fib is close to the 1.0100 major psychological level, so I set my entry order there.

I set my initial stop above the top of the triangle, which would also be beyond the week open price and the previous week high. As for my target, I’ll aim for the parity first, leave the rest open with a 75-pip trailing stop, and then party at the newest club a few blocks away. Whooo! Party after parity!

Here’s my plan:
Short AUD/USD at 1.0100, stop at 1.0175, first pt at 1.0000.

As usual, I’ll risk 1% of my account on this trade. By the way, thanks to all those who sent me their suggested setups! Hope this one works out! If you have any questions or suggestions, never hesitate to hit me up on the comment box below! You can also follow me on my Happy_pip Twitter account, or the BabyPips Facebook page.

Wish me luck!

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