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Close Trade: 2009-12-09 20:00


Good morning to my Asia session trading friends! We just saw Australia release stronger than expected jobs data with an increase of over 31k jobs. AUDUSD shot up right away, so it’s time to close as the Aussie now has fuel to run higher.

Closed remaining position at .9161

1st Half: +140 pips
2nd Half: +89 pips
Total: +0.81% gain

In retrospect, I probably should have closed earlier in the day, but the USD rally has been so strong (and gold has been getting hurt), I just had to go with the trend.

For now, I will continue to watch AUDUSD and if it retests that falling trendline, I may short if it holds as resistance once again. Thanks for checking out my blog and stay tuned!

Trade Adjustment: 2009-12-08 17:10

Good afternoon! It’s been a hot minute since I posted my trade idea on AUDUSD, and what a ride it has been since then!

With the help of better than expected US jobs data on Friday (11K jobs lost vs. 120K job loss forecasted), the Greenback shot higher and AUDUSD dropped soon after and into this week on a mix of new of questions: interest rate hikes sooner than later? a flight to safety on Bernanke comments, Dubai issues, and Greece debt rating downgrades?

Whatever the driving force may be at the moment, the Dollar rally has pushed my position to its first profit taking level at .9110, where I closed half of my position to lock in profits and adjusted the stop on the remaining position to break even. Now I have a risk free trade…Yipee!!!

But it seems that the USD rally may be running out of steam against the AUD, especially as the pair tests previous week’s lows and approaches major support between .8900 – .9000. I have decided to readjust the stop on my remaining position to just above today’s highs (around .9165) to lock in more profits.

Adjusting stop on remaining position to .9175.

Australia has their jobs data release on Thursday (0030 GMT). I may close out my position ahead of that event as positive job growth is expected and could hurt my short position in AUDUSD. Stay tuned!

Trade Idea: 2009-12-02 15:38


Good afternoon friends! I have decided take a short position on AUDUSD on an excellent technical setup. Am I a crazy woman for going against the trend? Let’s see…

I see a plethora of technical indicators telling me that AUDUSD may swing lower. First, the pair has rallied to the falling trendline, where we also see stochatics indicating overbought conditions and a strong bearish candle. The kicker for me is the hidden bearish divergence between the price action and stochastic indicator. The price is making lower “highs” while stochastics have made higher “highs.”

Now, there are a ton of fundamental arguments calling for the pair to move higher like the RBA raising rates, gold making new highs, and that the economic situation is getting better. And I agree that if the markets were moving to fundies, then I probably wouldn’t touch this trade, but markets have been moving based on sentiment influence. Here are my arguments that sentiment may shift.

  • It seems like everybody and their mama is in gold and to me. With fewer buyers left in the market at the moment, we may see a short term correction on the precious metal and profit taking.
  • The RBA has hiked rates up to 3.75%, but the outlook is that they won’t hike again until they re-evaluate the inflation picture in February 2010. Markets can move a lot between now and then.
  • While the economic situation continues to improve from the death levels of the financial crisis, conditions are still shaky as credit still seems tight and unemployment remains high and getting worse.

So, with these arguments and a nice technical setup I have taken a short position. My stop is 140 pips (average daily true range) to weather the upcoming events that may shake up the markets (ie ECB interest rate decision and US jobs numbers). With ADP reporting further jobs losses today and revising previous numbers down, I expect the same from the US government (that’s unless they get creative with the seasonality and birth/death ratio adjustments to the numbers). If we do see weaker data may trade should work out nicely. Here’s what I am doing:

Short AUDUSD at .9250, stop at .9390, pt1 at .9110, pt2 at .8950

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

Thanks for checking out my blog and stay tuned! AUDUSD Forums Forex Chatroom

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