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Woohoo! It feels too great to start the week off by closing a winning trade! Just when I thought that I missed my PT at parity when AUD/USD dipped to a low of 1.0008 last week and that I might have to make more adjustments on my short trade, the pair made new lows today and seems ready to break below the 1.0000 handles.

AUD/USD Trade Closed

You might be wondering though why I decided to take my profits and walk away instead of holding on until AUD/USD actually breaks below parity. Well, for one thing, the 1.0000 mark is closely in line with last week’s low as I pointed out in my Comdoll Trading Kit for this week.

Another reason is that, with the summer drying up some of the liquidity in the markets, we could be in a ranging environment and I’m inclined to think that significant inflection points could hold well during these situations.

Although fundamentals still suggest that AUD/USD might have room to fall further, it’d probably be better for me to wait for an actual breakdown to take place first then just come up with another trade setup to jump in later on. For now, here’s what I got:

P/L in pips: 170 pips on my first position and 110 pips on my second position, for a total of 280 pips or an average of 140 pips per position

P/L in %: 0.8% on my first position and 0.75% on my second position, for a total of 1.55%

Pinch me if I’m dreaming, but I think this may have been my biggest win for this year. I couldn’t have done it without your support and feedback, so thank you from the bottom of my heart! Keep ’em coming!

Trade Update: 2012-06-22 1:22

Yipeee!!! Looks like I’m holding on to my winning streak for a while longer!

Thanks to growth concerns in China, debt worries in the eurozone, and weak economic data from the U.S., risk appetite took a nasty tumble yesterday. The Aussie was hit the most among the major currencies with AUD/USD plunging by 145 pips.

Good thing we’re on the right side of the charts this time! AUD/USD fell sharply during the later trading sessions, enough to trigger my second order near 1.0115. With the pair hanging at the 1.0050 minor psychological support, my first position is currently up by 125 pips and my second trade is up by close to 60 pips for a total of 185 pips or an average of roughly 90 pips per position.

AUD/USD Trade Adjustments

So how do I plan on getting out? Well, I’ve already adjusted my stop on both positions to my latest entry (1.0115) to lock in 60 pips on my first position and have a risk-free second position to hold over the weekend. Not too bad a plan, I think.

What do you think of my trade adjustments though? Should I get out completely and close all positions ahead of the weekend or keep my risk-free trade open? As always, your thoughts are very much appreciated!

Trade Update: 2012-06-21 10:22
And we’re in! My first entry order just got triggered and I’m hoping this could head all the way down to my profit target. Price pulled back right to my short order at 1.0175 during today’s U.K. session as risk appetite somewhat improved after the release of better than expected U.K. retail sales data.

AUD/USD Trade Update

However, the 1.0200 handle still seems to be holding like a boss and that’s probably because of the weaker than expected U.S. jobless claims report which kept the risk rallies at bay. Whether this behavior continues could still depend on a couple more U.S. releases due today, namely the existing home sales and Philly Fed index.

I’m inclined to think that, now that the FOMC has already announced its policy decision, the U.S. dollar could benefit from risk aversion again. Do you agree with me? As always, I look forward to getting feedback from y’all!

Trade Idea: 2012-06-21 03:08
Now that the Greek elections and the FOMC statement are behind us, will traders go back to trading on fundamentals?

I know I am! While all eyes were on the U.S. and the eurozone, I noticed that nothing much has changed in Australia’s landscape despite the not-so-dovish RBA minutes released early this week.

Not only that, but growth prospects in China, Australia’s largest trading partner, haven’t improved either. In fact, the HSBC manufacturing PMI further dropped to 48.1 after printing a 48.4 reading in May.

Besides, now that the Greek elections are over, I’m thinking that investors will soon pay attention to the rocketing bond yields and bailout prospects of peripheral economies. The EU Summit can ease some concerns, of course, but given the EU officials’ track record, I’m not expecting much.

On the technical side, I’m looking at the spinning top on AUD/USD’s daily chart to signal a reversal. After all, the level is also sitting right near the 1.0200 major psychological level and a possible 50% Fib retracement. Oh, and I hope you’re also seeing the giant bearish divergence on the chart!

AUD/USD Bearish Divergence

I placed my short order at today’s open price (1.0175) since I’m expecting a pullback to the former support area on the 1-hour chart. If the price drops below the previous day’s low and this week’s open price, then I’ll move my stop to break even and add to my position.

AUD/USD Broken Range

Here’s my plan:

Placed a sell limit order at 1.0175, add a sell stop order near the week’s open price, and then place my stop loss at 1.0275. My initial profit target is at parity, but I can always adjust it depending on the strength of the price action.

Anyone in this trade with me? Remember to read the risk disclosure!

What do you think of my plans? Are you also expecting high-yielding currencies to weaken in the next couple of days? Why or why not? Don’t be shy to share!

Good luck in your trades this week, buddies!

Happy time

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