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Trade Closed: 2010-02-07 22:19

PoD Chart

Whee! My second profit target at 0.8600 got hit last Friday after the US released their employment report. Despite the not-so-stellar non-farm payrolls figure, the unemployment rate dropped from 10% to 9.7%, spurring further USD-buying. The pair consolidated at the 0.8650 area prior to the report and even pulled back to the 0.8700 handle so I was scared that it would move all the way back to my entry point, at which I placed my stop. Upon the release of the NFP, the pair dipped to a low of 0.8578 before bouncing back up.

1st half: +75 pips / +0.30%
2nd half: +175 pips / +0.70%

Total: 1.00% gain

Trade Adjustment: 2010-02-04 21:50

Looks like things worked out perfectly for me as risk aversion came in strong last night. It seems that investors and traders are really concerned about what’s happening in the euro zone and in the US. The dollar and the yen benefited from run back to safety and well, so did I!

My short entry got triggered and the pair shot down over 100 pips, hitting my 1st take profit point and almost hitting my 2nd one as well! The pair has retraced a bit a but I have a feeling that it will shoot down a little more. I’m going to move my stop loss to my entry point to create a risk free trade ahead of the NFP report due later tonight.

Thanks for the all the comments guys! It’s very flattering – you make me blush! Tee-hee!

Trade Idea: 2010-02-03 22:24

PoD Chart

“I never thought I’d be in love like this. When I look at you my mind goes on a trip. Then you came in and knocked me on my face. Feels like I’m in a race but I already won first place…”

Ohh I’m sorry about. Haha. Can’t seem to get this song out of my mind. 😀

Anyway, looks like there’s a nice short play on the AUDUSD. When I glanced at its 4-hour chart, I noticed that the pair is still on a strong downtrend. In fact, a descending trend line can be drawn connecting the highs of the price. However, it seems like the pair is consolidating at the moment and is having some difficulty breaking below support at 0.8790. I suspect that, once it musters enough strength to breach this barrier, it could tumble all the way down to the psychological 0.8600 handle.

On the fundamental side, we know that the RBA decided to pause with their rate hiking for now. They said that they wanted to first see the effects of their previous consecutive rate increases before moving forward. They also added that Australia’s economy wasn’t performing as well as they initially expected.

On the other side of the globe, the US economic data has been particularly upbeat, with the ADP non-farm employment change coming out better-than-expected. It reported that there were only 22,000 net job losses in January, instead of 31,000 like initially predicted. Furthermore, December’s figure was revised downwards to 61,000.

In my opinion, the overall strength of the dollar, coupled with some slight risk aversion and the decision of the RBA to take a wait-and-see approach will eventually push the Aussie lower.

The US employment report will be coming out tomorrow though so I don’t want to hold on to this trade for too long. I’ll be sure to adjust any open positions or orders prior the report.

Here’s what I’m going to do:

Short AUDUSD at 0.8775, stop at 0.8900, pt1 at 0.8700, pt2 at 0.8600.

I’ll set my stop equivalent to the pair’s average daily range, which is around 120 pips. This means my stop loss would be at the psychological 0.8900 mark.

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

“…Sometimes love comes around…” Haha. ( ^_^ )

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