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Closed Open Orders: 2010-04-11 22:17

PoD Chart

Oh dear! The Aussie didn’t pull back as much as I expected it to and it looks like the price missed my entry by two measly pips. I probably should have entered at market when the price started rising above the 0.9250 area but, unfortunately, I wasn’t around to watch the charts back then. Although I’m a bit frustrated over the fact that this trade could have hit my first profit target at 0.9320.

It seems that the risk appetite is dominating traders mindset, and this was probably triggered from news coming out of Europe. Even though Greece got downgraded by Fitch, uncertainty regarding the debt issue dissipated as the EU and the IMF decided to provide a bailout package of $61 billion. This gave the euro some support, which in turn led to widespread dollar selling, which I think helped boost all majors like the AUD against the dollar.

I’m pretty annoyed that I missed out on this trade, but I guess I can’t get lucky all the time. I really think that the AUD is heading places so I’m probably going to wait for a pullback before I try and jump back in on the uptrend. For now, it’s back to eating all those goodies I saved up from Easter break!

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Trade Idea: 2010-04-07 23:42

PoD Chart

I’ve been waiting for a chance to jump in on the AUDUSD’s strong uptrend and it seems like I could go for the pullback. Last Tuesday, the pair finally broke through a long term falling trend line! For this reason, I’m only looking for long trades.

PoD Chart

I scaled down to the 1-hour for a possible entry on a swing trade. Right now, I’m looking to enter on a retest of the falling trendline, which happens to coincide with former resistance around 0.9220 and the 61.8% Fibonacci retracement level. I’ve placed my profit targets near former highs on the trend line and I set a stop equivalent to the AUDUSD’s average daily price movement of 100 pips.

Aside from the technical setup, I also have a bullish bias based on the fundamentals. Just a few days ago, the RBA decided to hike rates by 25 basis points, which gave the bulls another reason to take the AUDUSD up, up and away!

Ever since the global economy started picking up, Australia’s economy has been used as proxy for economic recovery. More importantly than the recent interest rate hikes, joblessness in the country has been ticking down month after month. After hitting a high of 5.8% last November, the unemployment rate now stands at 5.3%. The most recent labor report also showed that another 19,600 net jobs were created in March. I can’t say for certain but I think we’ll be seeing more improvements in Australia’s economy in the months to come.

The US economy, on the other hand, remains a bit shaky. In fact, the Federal Reserve has said earlier this week that although economic conditions have improved, unemployment is still exorbitantly high and credit conditions remain tight. Furthermore, the bank reiterated that they have no plans of raising rates yet. This gives me more reason to believe that traders will continue buying up the AUDUSD on interest rate differential alone.

Here’s what I plan to do:

Long AUDUSD at 0.9220, take profit at 0.9320 and 0.9400, stop at 0.9120.

Hopefully this trade works out just as well as my recent USDCAD trade did. Who knows, maybe the AUDUSD could also race towards parity? If it does, I might let part of my position run and treat myself to some lovely Belgian chocolates! Yum!!!

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