They say the trend is your friend… until the bend at the end! I learned this the hard way on my long AUD/USD forex trade, as I tried to go with the flow but the pair had a reversal in mind.
As I mentioned in my initial trade idea, I decided to go long on the test of the .8000 major psychological mark, which lined up with the rising trend line support and a broken resistance level. Apart from that, I saw a bullish divergence at that time so I figured that another bounce was likely.
But lo and behold… a breakdown occurred!
In retrospect, I can tell that there were plenty of opportunities for me to cut my forex losses and maybe even switch my biases. I could’ve closed the trade early after that long red candle closed below the trend line or I could’ve exited when price eventually broke below .7900. I guess I was still crossing my fingers that the pair would be able to bounce back then!
Besides, I had been counting on cautious remarks from the FOMC minutes to weigh on the U.S. dollar, but it turns out that Yellen’s speech later on in the week reaffirmed the Fed’s hawkish bias and spurred dollar demand. With that, I’m left with a huge dent on my account:
P/L: -150 pips / -1.00%
Boy, I sure could use some comforting words or a mug of hot cocoa to cheer me up now!
Other Popular Articles:
This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.