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Forex Review: 2014-07-02

The pictures for both AUD/CHF and EUR/GBP have changed, and ahead of a new set of top tier events, I decided to close out to lock in profits.  Before I reassess the landscape and look for new opportunities, gotta quickly reflect and see what I could have done better.

Original Trade Idea: Re-Entering AUD/CHF on the Pullback

AUD/CHF 1 Hour Forex Chart
AUD/CHF 1 Hour Forex Chart

Since entering this market long, it has gone nowhere but sideways.  This is partly due to the broad decline in FX volatility, the ECB rate cut reaction running out of steam, and choppy sentiment in the Aussie.

Technically, the pair broke below the rising trendline that I based my trade management framework on, creating a new chart and essentially invalidating the trend higher, at least on the shorter time frames.  Because of this behavior and the upcoming ECB monetary policy meeting, I decided to close this trade manually (.8390).

Total: -10 pips/ Breakeven trade

Because I’ve held onto this trade for a while, I’ve collected enough carry interest to offset the small 10 pip setback.  This is why it’s important to consider the interest rate differential when planning out a trade, especially on longer-term position trades.

I could have closed earlier for a slight capital gain, but it wasn’t until I saw that final “lower high” after this week’s positive RBA meeting that I was convinced there’s more of a probability for a move lower than higher. Overall, I think I played it the best I could given the information at hand.

Original Trade Idea: Scaling into a EUR/GBP Short

EUR/GBP 1 Hour Forex Chart
EUR/GBP 1 Hour Forex Chart

I was only able to get into half of my intended position on for EUR/GBP after the pair found strong resistance on a shallow pullback to the weekly ATR and PWH levels. Fortunately for Sterling bulls, the U.K. data continues to impress, pushing this pair back to previous support levels that held as the lows of June just below .8000.

Given the decrease in broad volatility and choppiness–and the upcoming ECB monetary policy meeting on Thursday–I’ve decided to take profits for now by closing manually at .7977. 

Total: +48 pips / +0.28% gain

I’m still short biased on this pair, especially if it sustains below .8000, but I’ll wait for this week’s big economic events before re-assessing and re-entering.

And finally, I’ve also closed out my GBP/CHF long orders as this pair has rocketed higher to break above 1.52 without much of a pullback.  I considered scaling into a smaller position on the pullback to 1.5150, but decided not to go with it as we approached the end of the quarter.  The broad market stories still support GBP/CHF longs, but I’m going to step away from this market until next week.

That’s it!  How do you think I handled my trades? Would love to hear your opinion on my trade management or your thoughts on the forex markets…please leave a comment below!

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