The breakdown turned out to be a fakeout and my short AUD/NZD position was taken out after an active Asia trading session. Here’s a quick recap.
Consolidation Breakdown on AUD/NZD?
Soon after entering short after the break of higher ‘lows’ and the break of the previous swing low, we saw buyers take back control likely on a combination of broad risk-off sentiment to hurt the Kiwi, and the Aussie finding buyers as iron ore prices rose on increased steel production in China, all last week. This sentiment continued into this week, enough so where my trade finally hit my stop out level at 1.0543 to close me out for a small loss:
Total: -165 pips/-0.50% loss on 0.50% risk
This trade was actually painful psychologically as the market turned quickly back to the downside during the latest Reserve Bank of Australia’s monetary policy statement. I was actually anticipating a bearish reaction thanks to Forex Gump’s pre-decision analysis, but I just couldn’t stay in the trade. And the final kick in the butt was that where I closed out was my original entry area that I spotted back near the end of June.
Overall, I actually don’t regret my entry, but I probably should have closed earlier when the support area held and re-assessed my strategy because I’m still short biased this pair. With that said, I’m still on the lookout to short AUD/NZD, but that’s it for now as I take a sec to take a breath and regroup.
That’s it for now but stay tuned for an adjustment to my positive AUD/CAD short to lock in profits, an updated entry strategy for my long CAD/JPY idea, and new ideas as always…good luck and good trading!
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