Oh no, not another loss! Just when I thought that I could finally get a winning streak, one of my comdolls did another number on my account!
Fundamentally, it seemed like everything was going against the Aussie. From its first trade deficit in 11 months to its super weak home loans report to the surprise Chinese rate hike. And don’t get me started on the extra cautious RBA statement we saw yesterday.
Then again, I have to admit that record-high gold prices, risk appetite, and now Australia’s stellar employment figures are enough reasons to shrug off the gloomy reports.
I was able to close at 1.0390, just around the resistance near the previous week’s high, which means that I’m down by 70 pips and my trading account took a nasty 0.7% hit.That just completely wiped out the profits I made in my previous winning NZD/USD trade! Now I feel like I’m in last week’s Midnight Madness sale when a girl in front of me grabbed the gorgeous dress I was eyeing. Sucks.
I probably should’ve just closed early last Tuesday when the pair dipped to 1.0300 then rebounded from the 50% Fib. I could’ve taken that as a sign that Aussie bulls are getting their mojos back. Oh well, just like I mentioned before, I should probably just stick today trades for now.
I guess I’m learning my lessons the hard way now. I should keep in mind that it’s not so much about how I think the price will behave, but more of where the markets say the price is headed. Repeat to self 100x: THE TREND IS MY FRIEND.
How about you? Do you have any trading mantra that you’d like to share? I’d love to hear from you!
AUD/USD has been on a strong run lately but, you know what they say, all good things come to an end. It does look like the pair topped out at 1.0405 and is poised to head lower, perhaps even break below that ascending trend line on the 1-hour chart.
If that happens, AUD/USD could drop all the way to the 1.0200 handle, which is closely in line with last week’s low. That will be my ultimate profit target for this trade since the potential drop could reverse upon hitting that former resistance level. I’ll be looking to add half a position at the 1.0260 area in case the pair breaks strongly below the bottom weekly range.
If 1.0400 is indeed a top, that major psychological level should hold as resistance and keep AUD/USD from going any further.
As for the fundamentals side of my trade, I’m counting on the worse-than-expected economic reports that came out from Australia while I was cooking sausage-stuffed mushrooms for my friends.
Apparently, Australia’s trade balance report spooked markets a bit when it surprisingly showed a trade deficit of 210 million AUD instead of the 1.15 billion AUD trade surplus that traders were expecting.
Also, the AIG services index released around the same time revealed a decline to a reading of 46.5 in March from its 48.7 figure in February, which suggests that purchasing managers in the services industry grew less optimistic in the last month.
I have to watch for the impact of the RBA interest rate decision though, as the report didn’t show as many dovish statements as I had predicted. Anyway, here’s my recipe for pips this week:
Short AUD/USD at 1.0320, stop at 1.0420, profit target at 1.0200.
Once I add to my position at 1.0260, I’ll be moving my stop to breakeven and trailing it. As always, I risked 1% on my initial position.
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