A return to risk was the name of the game today as risk-takers jumped back into higher-yielding currencies, like AUD/USD on a continue drop in bank borrowing costs and rally in commodities.
It was an amazing rally in AUD/USD as the pair hits .6600 during the Asia trading session and rallied almost 400 points! Needless to say, my short orders were triggered at .6800 and there weren’t any sellers’ insight to turn the pair back lower.
Total: -100 pips/ -1.0% loss
So, a small loss, but I’m glad I got out early as this train looks to keep going higher in the short term.
Trade Idea: 2008-11-03 17:59
Hello, my Forex Friends! As I stated in my last post, I will revisit AUD/USD at the beginning of this week, and it looks like the pair is giving us another opportunity to short against the falling trendline.
I am keeping it simple once again as I plan to short in the area marked on the chart at the falling trendline. Let’s see if it holds again and attracts some sellers to push the pair lower.Risk appetite is growing as credit markets continue to slowly unfreeze, but this may be a short-lived sentiment as we head into another Reserve Bank of Australia meeting this month. It is speculated we will see another rate cut from the RBA, possibly by another 50 basis points to 5.5 percent.
So, while the short term still looks fuzzy in sentiment and fundamentals, the technicals are showing that we may see the pair fall a bit in the short term and continue the downtrend. This is my main focus and here’s how I’d like to play it if we see a bit of retracement:
Short AUD/USD at .6800, stop at .6900, pt1 at .6700, pt2 at .6000
Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.
Stay tuned for updates!
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