What’s up forex fiends! Both AUD/NZD and GBP/USD are making moves in the last week or so, forcing me to make some adjustments to my open position & entry orders.
Trade Closed: Sellers At Strong Area Of Interest On AUD/NZD?
It was a month ago that I entered AUD/NZD short at 1.0900 to play my fundamental bias in favor of the Kiwi over the Aussie, as well as the technical setup of resistance and reversal patterns forming at a broken support area.
Since then, the pair trade sideways all through July hanging around the 1.0900, but price action has picked up as we kicked off the new month of August.
Unfortunately for me, AUD/NZD bulls took control, possibly on some positive economic reads from Australia (better-than-expected trade balance and retail sales data), and likely on expectations the upcoming Reserve Bank of New Zealand’s monetary policy meeting could sound dovish to market participants.
During the Tuesday Asia session, I saw the momentum picking up higher, and with the RBA meeting (who kept rates at 1.50% as expected) and RBNZ coming up, I decided to close out the trade early manually (1.0933) to limit my max loss.
Total: -93 pips / -0.31% loss on 0.50% risk
In hindsight, I don’t think there was much I could have done differently other than to close even earlier as there was no movement at all for a few weeks. Closing maybe a week or two ago and then re-entering right after the central bank meetings is probably a better move, and depending on what we get from the RBNZ this week, I may just hop back in the pair. The longer-term trend is still lower and my fundie bias is still in favor of the Kiwi, although a lot less so if the RBNZ does sound dovish this week. Time to sit back and wait what they give us.
Entry Adjustment: Short Play At Descending Highs On GBP/USD?
Last week I was looking to short Cable on a bounce that was likely to come from volatility sparked by the monetary policy meetings from both the FOMC and the Bank of England’s monetary policy committee.
GBP/USD did make a move higher last week after an expected rate hike by the BOE, but it wasn’t enough to trigger my short entry order at 1.3210, only getting as high as 1.3170ish before the bears took control. And since then it’s been a downhill ride from there with the pair now poised to retest the 1.2900 handle….doh!
So, while that move was missed, I haven’t given up on shorting the pair as Brexit no-deal scenario is likely to continue to put pressure on Sterling. But with stochastic indicating oversold conditions, a bounce could be on the way and I have decided to short if a bounce comes, which may happen given a slew of top tier economic events from both the U.K. and U.S. this week.
Here is my adjusted trading plan, which still provides a good max R:R ratio, even with a lower adjusted entry price:
Cancelled short order at 1.3210
Short half position GBP/USD at 1.3100, max stop at 1.3350, max target at 1.2100
I’ll still only be risking only 0.50% of my account on this position and with this setup, I still have an ambitious 4:1 potential max return-on-risk.
Hopefully I get triggered this week but I may adjust quickly depending on what we get from the economic data in August, as well as any Brexit developments.
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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