workingtraders
Short

$EURAUD - Weekly Resistance held + Sentiment supporting!

FX_IDC:EURAUD   Euro Fx/Australian Dollar
155 8 4
theworkingtrader.com
I will have to take the pair trade here...and benefit from both long audusd and short eurusd carry rate differential.
+1 Reply
tcas IvanLabrie
If you buy audusd and sell eurusd why instead of it you don't sell euraud?
Reply
Multiple reasons:
If 1) I buy AUDUSD, with a big position size and no stop loss, monitoring EURAUD for invalidation.
2) I sell EURUSD, same, big position, adjusted by volatility in each pair of this setup.
then
#A I get paid the rate differential in usd vs eur and in aud vs usd for as long as hold the position open. This is easily a two week hold. So, considering the positions will be big, the carry trade profits on each side will quite nice.

#B I don't need to suffer with stop loss placement in the volatile and illiquid EURAUD, nor deal with wider spreads.

#C The risk management is way more flexible, since if I want, I can close AUDUSD in profit and hold the EURUSD trade for a longer time if my analysis determines that will be the smarter thing to do.

#D I can use a WAY bigger position size, while being somewhat market neutral and flexible, just going by the average daily range figure of each pair, and adjusting the smaller ADR pair by the difference in volatility to compensate and keep both sides balanced.

It's not the same as shorting EURAUD, no.
Reply
tcas IvanLabrie
Thanks a lot. It's very interesting. I need time to think about it:) How do you calculate lot size for each pair?
Reply
See my publications, one explains this procedure in detail.
The entry and exit has to come from the EURAUD chart though...something The Working Trader has covered here rather well.
I'll publish my spin off, with more detailed levels and my own analysis next.
Thanks The Working Trader! Wouldn't have seen this setup if it wasn't for you.
Reply
tcas IvanLabrie
Thanks ones more. I will see your and The Working Trader publications.
Reply
Keep his charts in mind, he doesn't post often, but when he does, the opportunities are very good. One of my favorite chartists here.

EURAUD: Ideal opportunity for a pair trade
+2 Reply
Looks perfect for a short under the lows...maybe a retrace entry if possible.
+1 Reply
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