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Trade Closed: 2013-05-02 01:30

EUR/AUD Daily Chart

The markets just haven’t been acting the way I predicted they would! Instead of selling off ahead of the ECB rate decision, the euro has been appreciating. It’s defying the laws of gravity, man!

You’d think that it would weaken with the ECB widely expected to cut rates, but that hasn’t been the case. Some say that optimism for Italy’s new government has played a role in the euro’s rally. Others say that it’s because we’re finally putting the whole Cyprus bailout ordeal behind us. Still, there are those that believe that the euro is rising because they think a rate cut would do the economy good, and this is restoring confidence in the euro zone and the shared currency.

In any case, this has been a bane for my trade. In fact, I got stopped out just this morning.

Stopped out at 1.2850: -210 pips / -0.50%.

Yeah, it sucks seeing my streak come to an end like this, but I have no regrets. I still believe it was a fine technical and fundamental setup and would take it again in a heartbeat!

Anyway, I hope you guys had better luck! Til next time, this is Cyclopip, signing off!

Trade Idea: 2013-04-25 03:15

EUR/AUD Daily Chart

I’ll admit, price action has been pretty choppy this week and with the Bank of Japan interest rate statement coming out tomorrow, it’s just too difficult to be playing the yen crosses right now. That said, I’ve decided to focus my attention on other pairs, and I’ve come across this longer-term setup emerging on EUR/AUD.

Fundamentally, I think we could see the euro weaken against the Australian dollar, as recent speculation is that the ECB may cut rates in order to support the economic bloc. Recent data from Germany hasn’t been encouraging either, as manufacturing and services PMIs as well as the German IFO business climate report all printed weaker-than-expected results earlier this week.

As for the Aussie, we’ve been seeing it stumble in recent weeks, but with AUD/USD approaching key support around 1.0200, I think selling pressure could come to an end soon.

Technically, we’ve got a simple Fib setup near a former resistance zone, as price is currently finding resistance at 50.0% Fib level. Coupling this with the bearish marubozu candle on the daily chart and Stochastic indicating overbought conditions, I think this setup is ripe for the picking!

Here’s what I plan to do:

Short EUR/AUD at market (1.2640), stop loss at 1.2850, take profit at 1.2250.

This gives me a pretty solid 1.85:1 reward-to-risk ratio, which can be further maximized if I plan to add on the way down on retracements. As usual, I’ll be risking 0.50% of my account on the trade.

What do you fellas think? Do you agree with my analysis on this long-term setup?

Risk Disclosure
Weekly Watch: April 22 to 26, 2013
Q1 2013 Trading Performance
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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.