If you have read my last AUD/USD trade, you would know that I got burned by the pair when I tried to short it early in the week.
Apparently, the “broken rising trendline” that I spotted wasn’t broken after all. Boo!
Taking a look at the chart we can see that AUD/USD found support at the psychological 1.0300 handle, which is also right around the time when a bullish divergence popped up in the chart.
What’s more, Stochastic was just leaving the oversold region! If I had only spotted this setup earlier instead of clinging to my trade idea, I could’ve made as much as 450 pips on these reversal signals.
I could’ve bought at 1.0300, placed my initial stop 100 pips away, trailed it by 100 pips, and then added 1 position for every 100 pips (a 100/1/1 stop-trail-add strategy).
Then, near the end of the week, I could’ve closed the trade at the minor 1.0550 handle near the top weekly ATR.The strategy would’ve provided not only a 450-pip opportunity but also a 4.5:1 reward-to-risk ratio. I bet I would’ve REALLY enjoyed my weekend if I was in that trade.
For now, I’ll just keep on monitoring my comdoll pairs and watch closely for any good trade ideas.
I know that I’ve already made progress on identifying good setups in hindsight, but now I have to work on my timing. Hope we all have the best luck with our pips next week!
What Moved the Comdolls This Week?
Another week, another rally! Setting new records must be the hobby of gold and crude oil because they just reached new highs this week. Gold prices seem to be safely above the $1450/ounce mark while crude oil just breached the $110/barrel level. Is inflation about to heat up or what?!
It does look like investors turned the risk-taking switch back on as they bought up the higher-yielding currencies this week. The economic calendar didn’t even have to churn out a lot of upbeat figures to keep the rallies going!
In fact, Australia saw a couple of surprisingly poor reports (trade balance and home loans) yet AUD/USD didn’t seem to mind as it just breezed through the 1.0500 mark.
Meanwhile, USD/CAD easily drilled through the .9600 handle like it was made of styrofoam. The Kiwi is also reaching new highs, after successfully landing above the .7800 level against the Greenback.
I think Charlie Sheen can really learn a thing or two about “winning” from these comdolls!
While the comdolls went about their winning ways, my account suffered the exact opposite. You see, I attempted to predict a reversal by taking a counter-trend trade. Tsk tsk…
I’d like to share with you this quote that my fellow trader, foricks, posted on my losing AUD/USD short trade this week:
“The thing about trains is it doesn’t matter where they’re going, it just matters that you get on.” – The Polar Express
I think this quote really applies to gauging market sentiment. The ugly truth is that the market doesn’t really care what you think. And as more and more traders jump in on the ongoing trend, the stronger it gets. If there’s not enough reason for the trend to end, it’s best to just go with the flow.
While I learned this very important lesson this week, I can’t help but feel gloomy over the huge dent in my account. Good thing I’ve got some friendly followers on Twitter who cheer me up. Thanks for the kind words, everyone!
If you’re already in the loop, watch out for my update on the best trade setup for the week. These comdolls just keep going and going like an Energizer Bunny that y’all could be in for a 200-pip treat!
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