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Bahh! So much for that short-term descending trend line pullback! I got stopped out on my GBP/AUD forex trade when the commodities got slammed yesterday, but I’m looking to make pips off this new market theme with a fresh idea.

First things first, here’s what happened on my GBP/AUD short position. As I’ve shared in my previous update, I decided to add on a retracement to the 2.0700 area right around the 61.8% Fib and trend line. Things were actually going pretty well right until the end of the week… before the comdoll bloodbath took place yesterday.

GBP/AUD 1-hour Forex Chart
GBP/AUD 1-hour Forex Chart

Thank goodness I trailed my stop loss to my initial entry (2.0880) so my first short position was closed at breakeven while my second one was stopped out for just a 0.5% loss. It looks like the risk-off environment could continue to weigh on the higher-yielding Aussie for much longer so I’m not too bothered that I was taken out of this short trade.

I’m hoping to be able to catch some pips off this developing market theme, though, since it might keep comdolls in a downtrend for the next few days. The latest Chinese trade balance didn’t turn out so well, as it indicated a 3.7% slump in exports and a 5.6% tumble in imports, reflecting weaker demand for Australia’s raw material products. And now that iron ore prices are hitting record lows, the Land Down Under’s trade revenues could take a double-whammy.

Because of these factors, I’m keeping a close watch on this potential reversal forex setup on AUD/JPY:

AUD/JPY 4-hour Forex Chart
AUD/JPY 4-hour Forex Chart

I’ll post more deets up once I’ve set my entry orders, but I’d like to know what you think of this forex trade idea first!

Cheers,

Happy time

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