No luck on getting additional momentum in EUR/AUD after the consolidation break. And with a potentially negative Aussie event ahead, I decided to cut this trade quickly to avoid likely additional losses.
Trade Review: Triangle Breakout on EUR/AUD?
A couple of weeks ago, it looked like EUR/AUD was breaking out of consolidation on dovish rhetoric from the European Central Bank and on positive economic updates from Australia and China. So the fundamental and technical picture was clear enough to take a nibbler short position in case traders jumped in on the fresh break, which I did at market (1.5726).
Unfortunately for my position, EUR/AUD continued to be a choppy mess with no downside momentum, despite more positive Chinese economic data (China’s GDP, Industrial Output and Retail Sales Top Expectation) and Australia data (Australia jobs surge past expectations), while European data continues to show weakness and the ECB doubts a projected growth rebound.
So, this pair basically went no where for the last two weeks, and with the Australian CPI coming quickly (and expected to disappoint relative to the previous read), I’ve decided to cut the trade with a very small loss for now by closing at market (1.5816):
Total: -90 pips / -0.22% on 0.50% risk
The euro has been relatively strong despite not only the lack of a bullish catalyst, but continued weak economic updates and dovish commentary from the ECB. My best guess is that ths is likely a sign of an oversold market and profit taking at the moment. So, while I’m still fundamentally short biased on the euro, I’m staying away from euro short positions for now. As for the Aussie, I’m still neutral to bullish on improving Chinese and Australian data, as well as a decent chance of the U.S.-China trade negotiation situation resolving itself positively. But we’ll see if that sentiment holds based on the upcoming CPI data and the market’s reaction. Stay tuned and please let me know your thoughts on EUR/AUD or my trade management in the comment section below. Thanks for checking me out!
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