Happy New Year, comdoll buddies! For my first forex trade for 2015, I’m looking at this descending trend line setup on AUD/USD. What do you think?
This pair has been on a steady downtrend for the past few months and fundamentals suggest that this could carry on. For one, the U.S. economy just boasted of an impressive Q3 2014 GDP upgrade from 3.9% to 5.0%, reviving speculations of a Fed rate hike for this year. The upcoming release of the FOMC minutes should shed more light on this monetary policy bias while Friday’s NFP report could indicate whether or not the economic progress will be sustained.
On the flip side, the latest data from China reflected weakness in their manufacturing sector, which might mean lower demand for Australia’s raw material exports. Data releases from Australia and China later on this week, namely the Land Down Under’s building approvals and China’s inflation figures, are expected to reveal more weak spots.
I’m looking to short this pair around the falling trend line and the 61.8% Fibonacci retracement level seen on the 1-hour forex chart. That’s right around the .8150-.8200 psychological levels, which might act as resistance for the pair. I’ll be aiming for new lows at .8000 with a tight stop above the latest swing high.
Here’s my plan:
Short AUD/USD at .8150-.8200, stop loss at .8250, profit target at .8000. I’m planning on risking 1% of my account on this trade.
Of course I’ll be keeping close tabs on the FOMC minutes and the top-tier releases from the U.S., Australia, and China throughout the week if I’m able to enter this trade. Do you think it’s a good setup?
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