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Taking a swing on AUD/USD as the bulls seemed to have run out of steam ahead of a potentially bearish economic update from Australia.

 AUD/USD Back to the Downtrend?

AUD/USD 4-Hour Forex Chart
AUD/USD 4-Hour Forex Chart

Going with a short-term idea to play the upcoming Australian jobs data, set to release just a few hours away. Based on the latest PMI reports from Australia that show employment contraction in the manufacturing & construction sectors, odds are looking better than even that the official government number is likely to come in weaker, which seem to be reflected in price action in Aussie pairs. In AUD/USD specifically,  we seem to be looking at a reversal in the works after AUD/USD bulls were unable to break above 0.6850 – 0.6900.

So, with short-term USD strength in play off of today’s FOMC event (outlook on further cuts not clear) and the idea that we’ll see a weak read on employment from Australia, I’ve decided to take a very small position and place an order to short another position if the pair rallies. My max stop will be above the recent swing highs (around 0.6894) and my target over the next few weeks will be the recent swing lows that held strongly through August.

Here’s what I’m doing:

Short quarter position AUD/USD at market (0.6828), max stop at 0.6970, max target at 0.6700 with 0.25% risk

Short quarter position AUD/USD at 0.6875, max stop at 0.6970, max target at 0.6700 with 0.25% risk

I’ll be risking 0.50% of my account if all positions are triggered, and my potential return-on-risk is about 1.37:1.  But again, it’s highly likely I’ll exit this trade before the end of the month after reassessing the latest Australian jobs and to see the fallout of today’s FOMC monetary policy statement.

Stay tuned for updates and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.

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.