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Trade Closed: 2010-01-17 21:31

PoD Chart

Yikes! As risk aversion returned to the markets, the AUDUSD dipped back to the 0.9200 area, causing my adjusted stop on my second position to get hit. Commodity currencies took a hit last Friday as oil and gold prices retreated. Apparently, weak US fundamentals forced many traders to tone down their optimism, causing a safe-haven rally. Oh well, at least I was able to lock in 100 pips on my first position.

1st half: +100 pips
2nd half: 0 pips
Total: 0.50% gain

Hmmm, it seems that the price action on the AUDUSD has formed very visible double top, which is a strong reversal signal. I might just have to shift my stance to a more bearish one my next trade… With risk aversion returning to the markets, this could be a good chance to go short.

Trade Adjustment: 2010-01-14 20:57:01

Good day ladies and gentlemen. It looks like my trade idea worked out pretty well, as my first profit target was already hit. Support at .9200 remained intact, which gave a reason for buyers to start jumping in the overall trend again.

More importantly, Australia’s employment situation report came out with positively surprising results. It showed that 35,200 net jobs were added in December, much higher than the 10,200 consensus. Meanwhile, the unemployment rate tapered down to 5.5% instead of rising to 5.8% like initially expected. Needless to say, this helped the Aussie soar and test this year’s high, hitting my first profit target in the process.

Now that my first profit target is hit, I’ll be moving the stop on my second position to .9200 (my entry point) for a risk-free trade! Stay tuned!

Trade Idea: 2010-01-11 22:13:58

PoD Chart

After seeing a bleak NFP report last Friday, the USD could continue selling off against its counterparts as the upbeat sentiment for the US economy gradually fades. In contrast to the US labor market, Australia’s jobs situation is looking bright. Just a few hours ago, Australia released its ANZ job advertisements report, which printed a 6.0% increase for December. This sets a bullish tone for the Australian employment report due Thursday this week. Also, China recently reported a rebound in exports, possibly overtaking Germany as the world’s largest exporter. This is definitely good news for Australia since China is its major trading partner.

Tomorrow, Australia will release its home loans report, which could show a 0.4% decline. Later this week, US will release its retail sales report. Forecasts are for a mere 0.4% uptick in December following the 1.3% increase seen last November. However, the weak jobs situation could place a downside risk on the upcoming retail sales report.

On the technical side, we can see that the Aussie has been on an uptrend since mid-December. To find a nice entry point, I used the Fibonacci retracement tool. The 61.8% Fib level looks like a good entry point, since it coincides with both the uptrend line and the .9200, a psychologically significant number.

My stop will be roughly equal to the pair’s daily ATR, which would place my stop below .9100, a resistance turned support level. As for profit targets, I have set two. I have placed the first one at .9300, this year’s high and placed the second one at .9400, last year’s high.

Long AUDUSD at 0.9200, stop at 0.9080, pt1 at .9300, pt2 at .9400.

Remember to never risk more than 1% of a trading account on any single trade! Please adjust position sizes accordingly!

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