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Trade Closed: 2010-02-12 00:30

PoD Chart

Good morning my European session trading friends! Yesterday, we saw the Australia employment data release stronger than expected jobs data with an increase of 52,700 jobs in January. Needless to say, my account took a small hit as price rallied furiously to my stop loss point. Meanwhile, Australia’s unemployment rate eased to 5.3% from 5.5% the month before.

Stopped out at 0.8900
Total: -1.00% loss

In hindsight, I should’ve probably closed earlier that day but the bias in buying dollars just kept me from exiting. I guess for now I’ll continue to watch the Aussie if former highs hold as resistance, which would give me a chance for short trade to go along with the overall downtrend. Stay tuned!

Trade Idea: 2010-02-09 21:36

PoD Chart

The lack of tier 1 economic reports in Australia and the US yesterday allowed the Aussie to regain some of its mojo back after slumping over the past several days. However, since there are no positive economic catalysts seen in the horizon and given the market’s current bearish sentiment, I believe it is likely for the Aussie to go with its overall trend and continue its decline.

Earlier today, the consumer sentiment for this month of February showed a dismal -2.6% reading. December’s home loans also dropped further by 5.5% on top of the 6.1% decline in the previous month. These are just some of Australia’s not so good fundamentals that will keep on weighing on the Aussie.

Looking at the 4-hour chart, I spotted a descending trend line connecting the highs of the pair. I also noticed that the broken support level around 0.8800 lines up with the 61.8% Fibonacci retracement level. The pair already touched this level a few hours ago but I don’t think it’s too late to enter at market now.

Besides, the bearish divergence hints that downward price action is up next. I placed my first profit target 5 pips above the previous low of 0.8620 and my second profit target at the psychological support at 0.8500. I set my stop farther than the 76.4% Fibonacci level.

Here’s what I did:

Short at market (0.8780), stop at 0.8900, pt1 at 0.8620, pt2 at 0.8500.

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.

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