After adjusting my AUD/USD trade plan to lock in a profit and increase my potential max profit, AUD/USD did move higher and trigger my adjusted stop. Here’s a quick review!
AUD/USD Resistance Play
A few weeks ago, I decided to short AUD/USD based on the resistance forming on the four-hour chart above, and on my expectations of a disappointing round of Australia economic data.
That setup quickly worked in my favor, nearly reaching my target at 0.7025, at which point I decided to adjust my trade to lock in a small profit and increase my max potential by rolling down my target down to the major psychological level of 0.7000.
Unfortunately for me, AUD/USD rallied not too long after the trade, rolling with positive broad risk sentiment on U.S. stimulus hopes. It was enough to bring the market back up to my adjusted stop at 0.7120 to close me out for a small profit.
Total: +39 pips / +0.17% gain on 0.50% risk taken
In hindsight, it looks like my stop may have been a bit too tight as the pair quickly found resistance at the 38% Fibonacci retracement area, before turning all-out negative as risk sentiment grew last week on rising virus cases in Europe and the U.S. Eventually, the pair did drop lower, enough to hit my adjusted profit target at 0.7005.
So, was I wrong in my adjustment? I think yes and no. I think it was right to make the adjustment as there was always a looming risk of a stimulus deal actually getting passed. But I probably could have not rolled down my stop so much to give the trade room to breathe.
Overall, it was a good setup and I was right in the end from an analysis standpoint but was just a bit too tight with my risk management practices, which seems to be the case oftentimes.
Well, that’s it for now on AUD/USD, and with the U.S. election coming soon and the latest monetary policy statements from both the RBA and Fed this week, I’m staying clear of AUD/USD for now, but it should be an interesting market to watch as these week’s events unfold.
Stay tuned, 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.
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