Well, that was quick! The fundamental situation changed for GBP/AUD just a few hours after I shorted so I’m gonna jump out of this trade while it’s still in the green.
Short GBP/AUD Trade
I caught a short-term pullback entry on this pair to the 38.2% Fib and broken support around the 1.6200 handle. Bearish momentum returned but price failed to make it back down to the swing low near 1.6050 so I already had some doubts that sellers are able to regain control.
As it turned out, U.K. Prime Minister May had been attempting to ease fears of a “hard Brexit” by putting negotiation plans up to a parliament debate. This allowed some market watchers to get their hopes up that the U.K. can stay in the single market, but it wasn’t enough to cast doubts that the Brexit would push through.
Meanwhile, the Australian dollar took a huge hit after the Chinese trade balance missed expectations. The surplus narrowed from 346 billion CNY to 278 billion CNY due to a 10% tumble in exports, which doesn’t bode well for Australia’s trade activity. Imports were down 1.9% in September, unable to sustain the pickup seen in the previous month.
Because of that, GBP/AUD might have a tough time pushing for new lows as traders might no longer be feeling so bullish on the Australian dollar or as bearish on the pound. I’m booking my teensy profits in the meantime, but I’ll be on the lookout for a much better entry if this pair pulls back.
Here’s what I ended up with:
P/L: +25 pips / +0.012%
Yep, it’s not much at all but I’d rather lock in small gains than take a loss. Besides, pound pairs seem to be exhausted from their dive and signs of a short squeeze are popping up. As I always say, when in doubt, get out!
As always, don’t risk more than 1% of your account on a single trade and make sure you read our risk disclosure if you’re thinking of taking the same setups.
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