FX:AUDUSD   Australian Dollar / U.S. Dollar
I have taken a short position in AUDUSD for the second time this week, the first trade hit target nicely and is linked below. The [air is in a confirmed downtrend and has just pulled back in three waves which allowed the projection of the turning point shown here as a green box. Stochastics have re-set to overbought, a necessary condition, RSI is overbought on the 1 hour and greater than 50 on the 4 hour. I expect at least a reaction from this area that will allow us to get the stop to break even if we don't get a new low.
Fundamentals and correlation look quite promising, the Aussie will suffer more than most if the trade war continues to gather steam and the Fed rate-hiking cycle will reduce the attractiveness of any carry trade sucking money into the US. The DOW has been down 8 days in a row which hints at a mild risk-off market and the EU start its retaliation to the US trade tariffs today, I guess there is a good chance Mr Trump will respond to this move with a similar big tariff threat in a similar way as he did with China. An EU-US trade war is far more concerning than a China-US one.
I had a similar set up on NZDUSD but that missed its sell limit set at 0.6915 but that is often the case with these highly correlated pairs. A similar trade also exists in the GBPUSD but that trade will probably not arrive until next week.
As always I will be risking 2% of equity and hoping for better than a 2:1 return.
It has been a rather poor week, AUDUSD hit target for 4% and NZDJPY hit stop loss for -2% with USDMXN also underwater and looking like it also might get stopped out for 2%
Trade active: The trade was taken at 0.7426, I will look to move the stop to breakeven if price drops to 0.74. If the wave B high is in place then we may have caught the start of the wave c to complete the move lower which began on June 6th. It is reasonable to assume that wave C=Wave A in time and length giving a final target of 0.7151 giving a potential risk-reward of 13:1, these large R:R's rarely materialise but it shows the high potential of this trade.
Trade active: Stop loss to entry, looks like its going higher, will look to sell again at a higher value but do not want to risk any capital here
Trade active: Price is moving lower and the trade is approaching first target. The probability of a move higher now looks very low, Risk reward of 2:1 will be achieved should price get to 0.7370. I will continue to hold and target significantly lower. I am also holding short NZDUSD and GBPUSD

Comments

eehm, dollar run over for now...

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