Trade Closed: 2010-04-27 23:49
Risk aversion took quite a nice run yesterday, causing the Aussie to fall against the greenback. It turns out that the IMF thinks the Greece needs another €10 billion in bailout funds in order to pull itself out of debt. That’s on top of the €45 billion to be supplied by the EU and the IMF!
No wonder investors bought up the safe-haven US dollar yesterday… and, unfortunately, pushed the AUDUSD back below the 0.9200 handle. Good thing I moved my stop to breakeven at 0.9220.
First half closed at 0.9300: +77 pips
Second half closed at breakeven: +0 pips
Trade Update: 2010-04-26 23:03
Whee! Even though Australia didn’t release any economic reports yesterday, the AUDUSD rallied all the way up to the 0.9300 handle and hit my first profit target. It looks like that falling trend line is holding – it’s a good thing I adjusted quickly this time!
I still have half of my trade open, with a profit target at 0.9400 and a stop at my entry of 0.9223, which means I’m now trading on the house – ha!
Hmm, it looks like the freshly released PPI figure, which came in better than consensus, didn’t help the Aussie hold on to its gains as price is now pulling back. Should I add to my position on the retracement or close early?
Trade Update: 2010-04-25 23:34
Good day fellow traders! It looks like I may have to make an adjustment on my AUDUSD long trade. When I checked the 4-hour chart today, I noticed that the price has been forming lower highs and it might be better to lock in profits earlier.
In fact, there’s a descending trend line connecting the highs of the price and the uptrend could reverse upon hitting that trend line. I moved my first profit target to the psychological 0.9300 handle but I’ll keep my second profit target at 0.9400 since the upcoming RBNZ rate statement could be a hawkish one and could have a positive impact on the Aussie. In order to have a risk-free trade, I’ll just move my stop to breakeven once my first profit target gets hit.
Trade Idea: 2010-04-21 22:41
As forex guru Forex Gump pointed out in his blog earlier this week, sentiment is up in the Land Down Under, as the Reserve Bank of Australia delivered some pretty hawkish comments. According to RBA Governor Glenn Stevens and his mates, it looks as if higher interest rates could be in play in the near future. Naturally, this is good news for the Australian dollar, as it helps spur demand towards carry trade.
Taking a look at other markets, gold and equity trading has been positive this week, boosted by improved risk appetite. I think the only reason the Aussie hasn’t been able to sustain its gains its because of potential profit taking that took place once the AUDUSD pair topped the 0.9300 mark. But overall, the trend is up for the Aussie, and I do think its about time I caught this wave of optimism!
Of course, I can’t just ignore potential catalysts and economic data being release this week that could cause some volatility. Over the next couple of days, we’ve got producer price index, existing home sales and durable goods orders reports coming out of the US, while Glenn Stevens will be delivering a speech early on Friday. Any surprises from these reports or comments made by Stevens could rock the markets, so I’m looking to put a wide stop on this trade.
Aside from that, I’m going to have to look out for more news about the two Gs – Goldman Sachs and Greece! These two issues are weighing heavily on the markets, so I’m going to have to stay on my toes and adjust accordingly.
The AUDUSD has been riding on an upward wave like its summer all year long. However, looking closely at its 4-hour chart, the pair’s momentum as suggested by the stochastics appears to be slowing. Given this, we might see it to pause for a while and retrace back to the 0.9223 area. This level happens to be its weekly low. Notice also that this mark had acted as a resistance-turned-support in the recent past.
I’m going to place a buy order at the weekly low of 0.9223. I’m setting my stop loss below the rising trendline at 0.9123. My take profit areas are 0.9323 and 0.9400.
Again, here’s my plan:
Buy AUDUSD at 0.9223, stop loss at 0.9123, tp1 at 0.9323, tp2 at 0.9400
Oh, did y’all take a look at those new $100 dollar bills that the Fed came out with? They’re pretty trippy if you ask me! These bills are looking more and more like Monopoly bills! What’s next – a pink $500 bill? Ha!
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