Trade Closed: 2013-03-12 07:20:44
Just when we thought that a not-so-dovish RBA statement would propel AUD/USD above the major 1.0300 handle, a stronger-than-expected ADP report from the U.S. suddenly boosted demand for the Greenback. As a result, the Aussie dropped to near entry area and stopped my trade out.
I learned a few lessons from this trade. First, I should consider taking profits or at least lessening my exposure instead of moving my stop loss to break even. After all, price action was choppy at the time especially with lots of major economic events on deck.
I could have also stuck to my guns and kept my original stop loss since I was watching the daily chart anyway. Right now price is back above my entry area after dipping close to the 1.0200 zone.
Something to think about for the next trades I guess? For now it’s back to the charts to look for good setups! Got any comdoll setup that you’d like to share? Your two cents would be much appreciated!
Trade Update: 2013-03-06 08:35:44
Phew! I can finally breathe freely with this AUD/USD long trade as I got a candlestick confirmation on the daily time frame. As I pointed out earlier, a hammer candlestick formed on the 1.0150-1.0200 support zone. This was followed by a big green candle that closed above the hammer’s high, indicating that an uptrend could follow.
Now that price is moving towards the 1.0300 major psychological resistance, I decided to move my stop to my entry price of 1.0240. I do believe the rally could continue for the next few days as Australia’s GDP came in line with consensus at 0.6% while the previous quarter’s figure was revised up from 0.5% to 0.7%.
I plan to lock in half my profits once price hits the middle of the range near 1.0400, which has acted as an area of interest in the past. Do you think AUD/USD could go all the way up to the top of the range at 1.0600?
Trade Update: 2013-03-05 07:25:44
A few hours ago I got the confirmation that I was waiting for and pulled the trigger on my AUD/USD long trade.
I got excited when AUD/USD’s daily candle closed as a doji yesterday. Then, when Australia’s retail sales AND current account data both came in much stronger-than-expected, I got a feeling that the Aussie is in for a good day. Still, I waited for the big RBA rate decision. If you remember, everyone all but priced in a rate cut.
Lo and behold, the RBA actually kept its rates steady at 3%! Apparently, the central bank is satisfied with how its previous interest rate cuts are slowly spurring the economy. The news boosted AUD/USD to 100 pips above yesterday’s low.
I was able to buy at 1.0240 a few hours ago with my stop loss near the 1.0150 major psychological area. I also placed my initial profit target near the 1.0380 zone, which was a strong support and resistance area in February.
What do you think? Will AUD/USD reach my profit target given the number of major reports coming our way this week? Feel free to give your two cents!
Trade Update: 2013-03-01 03:25:44
I’m still keeping my eyes locked on the 1.0200 handle on AUD/USD but I’m still on the fence with my bias for this pair. I’ve decided to refrain from anticipating anything and just let the market decide for me as I plan to wait for more confirmation signals for the next few days.
For one thing, the U.S. sequestration is set to start today and even though this could be perceived as dollar-negative, I wouldn’t be surprised if the Congress tries to come up with a last-minute compromise or decides to postpone the spending cuts again. This could lead to huge weekend gaps later on so I’m not feeling comfortable about setting orders just yet.
On top of that, a quick glance at my trusty economic calendar reminded me that the RBA interest rate decision is scheduled next week, which could mean that traders could price in their expectations for a rate cut already. Things aren’t looking too sunny for the Aussie as we saw a couple of weaker than expected private sector data from the Land Down Under yesterday. Top that off with weak Chinese PMI figures and we’re seeing a more and more factors hinting at a potential selloff.
As I mentioned though, I’d rather wait for these events to play out instead of anticipating the market’s reaction. After all, the profit potential for either a short or long trade seems pretty wide so I’ll be fine with missing out on a few pips just as long as I catch a move with enough momentum.
What do you think of my plan?
On the bullish side:
1. The 1.0200 area is a HUGE technical support for AUD/USD. In fact, it hasn’t tested the level since October last year!
2. There are irresistible bullish divergences on the 4-hour and daily time frames.
3. Buying at 1.0200 with my stop just below the October 2012 low and profit target at around 1.0370 would give me a pretty cool R:R.
4. RBA’s Assistant Governor Debelle recently said that the Aussie would have to be higher before the RBA intervenes.
5. Gold prices rebounded sharply yesterday following Bernanke’s speech.
On the other hand…
1. The Italian bond auctions could seriously damage high-yielding currencies like the Aussie if the government doesn’t get enough bids.
2. Comdoll traders could continue to price in a possible RBA rate cut for next week.
Unfortunately, my #1 reason for not buying the Aussie is currently outweighing all the bullish points that I just pointed out. I’m thinking of waiting for the Italian auctions results before I set any orders. It’s a swing trade anyway.
How about you? What would you do if you were trading the Aussie?
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