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Closed Open Orders: 2009-11-08 21:04:43

PoD Chart

Good evening friends – here’s an update from my AUDUSD trade last week! It seems like I may have missed by a bit, as I was a little conservative and really wanted to enter at the trend line. The pair hit a low of 0.9026 before eventually shooting to the topside. The Fibonacci Retracement levels worked out well – too good, in fact – as the pair rallied quickly after hitting the 50% level. Despite the missed move, I think this trade idea was a step in the right direction. With the pair closing above 0.9200, I think I’m too late. Oh well! Could’ve been a nice trade!

Trade Idea: 2009-11-05 04:24

Late last night, while I was painting my nails, I read up a bit on the recent Fed statement. It seems that the Fed hasn’t really altered their stance on the state of the economy. For the nth time, they said that the economy was showing signs of improvement but once again, kept rates at ‘exceptionally low levels’. I think that this reveals that the Fed wants to remain cautious and that they fear that recent signals aren’t strong enough to warrant a rate hike. What does this mean for the dollar? Well, leaving the rate at a low level for an extended period of time could be bearish for the dollar as investors seem to be getting more and more risk hungry.

That being said, on the other side of the globe, the Reserve Bank of Australia has already raised rates twice, bringing it up to 3.50%. In fact, I just did some research and saw that this is the highest amongst all the majors! It’s no surprise that the Aussie has been on a nice run the past six months…

PoD Chart

So I took a quick look at the charts, and lo and behold, the pair has been on an extended uptrend since March. A clear signal to go long? As Pipcrawler always tells me – the trend is your friend. The question is though, where do I enter?

PoD Chart

After taking a look at the daily chart, Happy Pip suggested to me that I try to zoom into a lower time frame to try to get a better entry point. I then clicked on the 15 min chart and tried out the Fibonacci retracement tool. I noticed that the .618 Fibonacci level lined up nicely with the long term uptrend line at 0.9000! This is also a psychologically round number. Big Pippin once told me that big money (banks and other financial institutions) may place orders at such numbers, so we could see some buying pressure at that point.

Hmmm… a potential trade? I think I’ll take it! Here’s what I plan to do: Long AUDUSD at 0.9000, stop at 0.8900, take profit at 0.9200.

Pipcrawler told me to control my risk so I’m going to risk only 1% of my trading account per trade.

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