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My short position closed yesterday as the Aussie rallied at the end of the US trading session and hit my adjusted stop at .6730.

1st Half: +100 pips
2nd Half: +200 pips
Total: +1.0% gain

It has been a wild ride and the volatility took me out prematurely before the Aussie sold off during the Asian and European trading sessions today.

Again, it’s all about institution de-leveraging for now and the smart play is to gear down the leverage and ride the bumpy ride down.

Looking for proper technical setups will continue to be difficult as price action is pretty much all based on sentiment.

We may see a breather during the US session today after the panic sell-off and possibly a rally on short-covering/profit-taking into the weekend, but look for more moves down. Good luck and have a great weekend!

Stop Adjustment: 2008-10-23 10:21

Time for another stop adjustment as the pair continues to tread lower.

Adjust stop from .6830 to .6730 to lock in 100 more pips on the remaining position. I will continue to target .6500.

It looks like the recent selloff is running out of steam and we may be heading into a period of consolidation. This may be short-lived and look for more selling for the Aussie as institutions continue to deleverage carry trade positions and as investors continue to pull cash out of the markets.

Gold continues to get pounded down as the US Dollar continues to strengthen. Who knows when this will all stop, so you gotta just stay tuned! 🙂

Stop Adjustment: 2008-10-22 10:55

AUD/USD has moved lower as the global recession and its effects continue to be priced into the markets. Time to adjust stop once again!

Adjust stop from .6930 to .6830 to lock in 100 more pips on the remaining position. I will continue to target .6500.

Gold continues to get hit as the US Dollar rises and speculation on slowing raw material demand will continue to hurt the Australian economy. This sentiment trend will likely continue as focus shifts from the credit markets to the economy. Stay tuned!

Trade Update: 2008-10-21 09:15

It looks like risk aversion was the name of the game throughout the morning European trading session as higher-yielding currencies fell against the US Dollar, as well as carry trades. I’m currently around 100 pips in profit, so I’d like to make an early adjustment to lock in profits.

Close half position at market (.6825) to lock in profit. Adjust stop on remaining position to breakeven (.6930) to create a risk-free trade. From here on out I will trail my stop by 100 pips and continue to target .6500.

Stay tuned for more updates and adjustments!

Trade Idea: 2008-10-21 01:44


Greetings! There’s a simple technical play setting up that may be a great short opportunity on AUD/USD. Let’s take a look, shall we!

It really can’t get any simpler than this as we see a trendline break lower on the 4-hour chart. Stochastics are also in overbought territory, so we may have a swing trade opportunity to go lower.

Fundamentally, Australia is feeling the global growth slowdown like everyone else, and as demand for raw materials continues to decline, so may the Aussie against the Greenback as traders continue to flock out of carry trades and into safe-haven currencies like the US Dollar.

Also, the Reserve Bank of Australia cut interest rates earlier by 100 basis points, and there continues to be speculation that we will see further rate cuts during the economic turmoil.

So, the fundies and techs line up for me, so here’s my plan to short AUD/USD:

Short AUD/USD at market (.6930), stop at .7080, pt1 at .6780, pt2 at .6500

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.

So, I have a wide stop, which means a much smaller position size to stay within my risk comfort zone. Stay tuned!

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