Trade Update: 07-07-2011
Boo hoo! Just when I thought AUD/USD was gonna go for a breakout, the Australian employment data comes in much better than expected. Good thing my fingers were fast enough and I was able to exit immediately.
Unfortunately, I still ended up with a teeny dent on my account as the spreads widened during the release. It’s no biggie, but it’s still a 0.25% hit!
And I thought I was going for the win this one when I heard that China just recently hiked their interest rates AGAIN. *sniff* This was certainly negative for the Aussie because more tightening in China, one of Australia’s main trade partners, could put a drag on growth in the Land Down Under. Because of that, I decided to just hold on to my trade until the Australian jobs report.
Lo and behold! The actual employment change figure came in much better than expected, printing a 23,400 increase in hiring which was more than the projected 15,200 rise. Naturally, traders reacted to this news and bought up the Aussie even though the previous month’s figure suffered a huge downward revision from a positive 7.8K reading to a 0.5K DECREASE. Now that can’t be good!
Still, I decided to stick with my trade plan and close early because of the stronger than expected Australian report. I was able to close at 1.0740, which translated to a 0.25% loss on my account.
How could I have played this trade better? Do you think I should’ve just moved my stop loss to my entry point right before the release so I could’ve ended up with no loss at all?
Thanks for the thoughts,
Trade Idea: 07-06-2011
Hey guys, looks like we’re in risk aversion mode this week. I’m shorting AUD/USD! Who’s with me?
Fundamentally, I have three main reasons for shorting the Aussie. First is the general risk aversion brought about by more bad news from the euro region. Moody’s downgrade of Portuguese debt sparked risk aversion in markets, and took its toll on the high-yielding currencies.
Another reason why I’m not too excited on the Aussie is the rumor that the PBoC might be raising its interest rates soon. And why not? The PBoC’s schedule of its RRR and interest rate hikes was as regular as prime time soap opera, remember? And the PBoC has just hiked its RRR a few weeks ago! Since China is Australia’s biggest trading partner, the news of further tightening won’t go well with the bulls.
My last fundamental basis for shorting the Aussie is the parade of worse-than-expected economic reports from Australia. Aside from weak retail sales and building approvals reports early this week, we also saw how a very dovish RBA dragged on the Aussie. In its latest interest rate decision, the RBA kept its rates at 4.75% and even hinted at a possible cut in economic growth outlook. Yipes!
On the technical side of the trade I saw an overbought Stochastic signal which turned right around the time when AUD/USD was testing the 1.0730 handle. I originally plan to enter at the 61.8% Fib near 1.0750, but I will go ahead and short at market if the 50% Fib was proves too strong a resistance.
Since I’m feeling extra adventurous this week, I’m planning on adding to my winning position if price hits 1.0680. Of course, I’ll also keep really close tabs on Australia’s employment report tomorrow. You see, I noticed that AUD/USD tends to move by 100 pips or so at the release of the report, so I’ll probably close all my positions if it comes out better-than-expected. But if the jobs data turns out worse than expected, I’m adding to my position every 50 pips and moving my profit target to 1.0500!
What do you think? Are my stops and profit levels okay? I would love it if you guys give me a tip or two, or even tell us all about your other trade ideas! You can hit me up anytime on the box below, or even on my @Happy_pip Twitter and Playing with Comdolls Facebook page.
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