The Australian dollar made some big moves this week, enough so to affect both of my open Aussie trades in AUD/NZD and AUD/JPY. Here’s a quick recap on my AUD/NZD short and an adjustment to my AUD/JPY long.
Trade Closed: AUD/NZD Trendline Break?
In early June, I decided to short AUD/NZD to play my fundamental bias favoring the Kiwi over the Aussie, and fortunately, the trade started going my way after a bit of choppy price action.
At the beginning of July, I decided to reduce my risk by rolling down my stop to breakeven ahead of the RBA’s latest interest rate decision, which turned out to be a volatility dud. But that didn’t stop the Aussie from moving lower on the session, this time sparked by the idea of Australia locking down once again to contain the growth in COVID-19 cases.
So, everything was looking pretty good for my trade at the start of last week, but as we got news of potential vaccines hitting the wires to lift global risk sentiment, Aussie bulls came back in force, likely with the help of some positive data from its big trading partner China during the week (e.g., Chinese economy grew 3.2% in Q2 vs. 2.2% forecast, China Posts Surprise Trade Gains as Economies Try to Reopen).
And this week, that positive sentiment for the Aussie continued with the RBA refraining from increasing stimulus measures for the time being, pushing Aussie pairs higher like AUD/NZD, enough so to hit my adjusted stop at 1.0705 and close out my trade at basically breakeven.
Total: +1 pip / +0.00% gain on 0.50% risk
Symmetrical Triangle Break on AUD/JPY?
Just yesterday, I decided to adjust my trading plan on my long AUD/JPY position as it began to break above a strong resistance level. I increased my position size by 50% to maximize my potential max gain while rolling up my stop to 74.55 to essentially reduce my max loss from 1.00% to 0.13% of my account.
Well as mentioned above in the AUD/NZD review, the Aussie shot up quickly this week and we saw a more than one full daily ATR move in today’s session.
With the currency pair testing the next major psychological level and resistance forming at the moment, I decided to close down a big chunk of my position and roll up my stop to create a “risk-free” trade. Here’s what I did:
Closed 66% of my trade manually at market (75.95). Rolled stop on remaining position to 74.90.
With this adjustment, I’ve essentially locked in a +0.49% gain on my original 1.00% risk. So, even if the market fell back to 74.90 and triggered my stop, it’s still a win and my upside is basically wide open. But for now, my target is still 80.00, and with this adjustment, my max gain is now +1.43% on a now “risk-free” trade.
If the pair continues to go my way, I made add once again into this position, so stay tuned for that. And until then, let me know what do you guys and gals think of my adjustment! Did I lock in profit too soon? Should I have taken the whole trade down? Should have added even more? Let me know in the comments section below!
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