Happy Corner: Aussie (AUD) pairs

Trading Discussion Currencies
11

Sorry, too late for anyone to do anything with this, but I made some pips on AUD/USD earlier this week and thought you would want to see the trade, in light of our discussion last week.

We have been in a sustained uptrend on the Daily chart, which while currently stalled has not reversed. So my bias was for Long entries. We discussed last week the range on this pair, well this week the Hourly chart has shown a clear upper level of around 1.0615, with a rising trendline below that, giving us an ascending triangle.

All timeframes have recently been showing a lower Support level of around 1.0500. So with my Long bias from the Daily, and the ascending triangle on the Hourly, I looked for Long entries off the Hourly chart.

Monday morning (GMT) opened with a low test into the 1.0500 area on the Hourly chart, the 0900-1000 bar. I don’t like trading first thing on a Monday morning, so I did not take this, preferring to give the market a couple of hours to sort itself out (Price had made a lower low on the Friday before, so Monday could have seen this Support line break). The 1200-1300 Hourly bar gave us a second low test into this same Support zone. This is the trade I took.

My Entry was the break of the high of that bar, so the Entry was 1.0533, my Stop was below the low of the earlier low test (for only a few extra pips this is a lot safer), so at 1.0488, giving me a risk of 45 pips. I set my TP at 1.0600, just inside the established Resistance zone at the top of the ascending triangle (and five pips lower than the Weekly Pivot, which comes through at 1.0605). This gave me a 67 pip TP, for a 1.5:1 R:R. I risked 1% on the trade, so stood to make 1.5% if it went in my favour.

I could have been bolder with the trade, by taking the entry off the first low test (which would have worked out), or by setting my Stop below the low of the Entry bar (which also would have worked out), but given that this was Monday morning, and that the setup still gave me a good R:R, I was happy with how I played it.

It hit TP overnight Monday, so I started the week 1.5% up. I realize that this is in the past, so hope it does not just smack of showing off, but as you invited people to list their trades here, and given that we have just been discussing this pair, I thought that you might be interested in the trade. This was a very high probability setup, I’d take it every time I saw it.

ST

12

I have been looking at the daily chart for this pair and have noticed a nice descending triangle forming with lower highs and some real test of support over the last few days. The stoch is around 25 and going lower.
I haven’t looked to the week ahead but it seems like fundamentaly we’re headed into a risk off environment. My leaning is to a breakout through support. Noticing support, it has a LONG way to go, I think around 1.0250 for anything with any real strength.

I haven’t been doing this very long, so please tell me what I’m not seeing!

3 Likes
13

You’re right, that’s a descending triangle on AUD/USD’s daily chart. I tried to short on the “break” a couple of times but I got faked out :frowning:

It seems that, with the risk off environment that you mentioned, we might just see a break to the downside soon enough. But I’d probably wait for a really big catalyst for that to happen. For now, it looks like traders are uneasy about buying risky currencies, but at the same time AUD is still fundamentally stronger than USD. That’s probably why the 1.0450-1.0500 support refuses to give way.

But if you’re waiting for a breakdown, where do you plan to set your sell stop orders? I just might jump in with ya! :slight_smile:

4 Likes
14

I have been watching this, too, and for me the wicks (I use a candlestick chart for my Daily) are a little long to make the triangle that clean, so I would want to use Price Action to support my Entry to any Short.

happypip, presumably you tried entries on a couple of the recent low tests, say 25th May, 16th June or yesterday? For me, with everything else that is going on, and with the long wicks making Stop placement tricky, I would probably be inclined to play this one more cautiously - I would wait for a close below the Support level around 1.0500, then maybe even look for it to be retested with a high test bar. If we get that, I would happily enter off that bar. If it high tests then falls, then the Entry will be as efficient as playing it on the initial break (as it would enable a tighter Stop), and if it does not high test but just falls away, well, there are plenty more fish in the sea.

Risking 1% per Entry, I prefer to wait for confirmation of breaks from consolidation where the picture is slightly unclear, rather than just take them live, as it protects against fakeouts, the cost of which mounts up. I will enter live for a cleaner triangle, but this one is a bit of a mess, imho, so would rather wait for confirmation.

As Snook pointed out, there is potentially a long way for this pair to drop, so I think that there is room for a more conservative Entry.

Anyway, sorry to ramble on, just thought a different view might be interesting.

ST

7 Likes
15

I agree ST. I think the Aussie currency is fundamentally better off. So my other scenario is that it breaks to the upside because now all the sellers are exhausted. The stoch is close enough to the bottom to rally upwards. If thats the case then the highs towards the top of the triangle will probably hold. And the more I think about that, the more I think it to be the likely scenario.
If however it does break downwards, I think you are much more accurare than I, in that anyone should wait for a close well below all those support wicks before a short order.

1 Like
16

Hi guys! I noticed you were looking at the Aussie too so I decided to pitch in too!
I’ve been looking at this pair for a couple of days and I’m quite impatiently waiting for it to break as it has been ranging for quite some time now. I’m looking at it from a chaos trader’s point of view.
As you can see the alligator has been in a range for a long time and this often anticipates a large move. I’ve been waiting for a fractal to be broken (blue horizontal line). I call the bar that broke the line the “confirmation bar”. My entry will be the low of this confirmation bar at 1.0452 (green horizontal line). For the profit taking I’ve been lookin’ for relevant support and the 1.0200 psychological handle is a good candidate also because it has been a relevant support in the past. I will add to my position along the way when my indicators tell me to. If it turns out fine this will be an amazing trade, if it finally decides to move of course… I’ve seen snails that move faster than this pair lol! Have a good one guys! :slight_smile:

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17

As I type, it is 10pm EST 6/26. AUD fell to 1.0420 and is now bouncing up to 1.0450. I’m going to see how high this bounces over the next few hours and place a sell if it hits a nice Fib level (maybe 50%) from the 6/22 high. The fundamental calander has nothing for the AUD this week, so whatever USD news we get looks to move this pair all week long. Happy pip hunting to you guys and may the odds be with you.

2 Likes
18

Yep, you’re right, I did get faked out with this pair sometime during the last week of May. The support zone seems to be much wider on this one (1.0450-1.0500) but it looks like its broken now. But I’ve learned my lesson with shorting on breaks so I’ll just wait for it to show signs of retracing.

I’m with ya and snook on taking a more conservative setup for this one, if it does show up!

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19

Wow, it’s certainly nice to see a chaos trader’s opinion on this thread! Welcome to my humble corner, Martinus!

It looks like AUD/USD (the alligator?) already broke below those levels you drew. Were you able to get in on a short trade? I’m eyeing the 1.0200 area too for my target but I still haven’t decided where to set my stop. Where did you place yours?

2 Likes
20

I have my Fibs up, too! But this pair seems to be falling so fast now and isn’t showing signs of pulling back yet. Oh well, patience is a virtue, I suppose.

Not that much news on the US schedule either, but weak data could once again trigger AUD-selling like we saw last week. Keep me posted if you were able to jump in on a short trade, okay?

Happy pip-hunting to you as well!

1 Like
21

I went short early this afternon. I read through the “Gartman Letter” which apparently everyone in the commodity business subscribes to and it said that gold will probably be testing some 1450-1400 lows this week. It a very reputable letter and so that kind of helped to sway my short position. we’ll see how it goes this week.

22

Hi again HappyPip! Did you have a great weekend?
My short is now triggered and I will start to add to my overall position as the different signals start to show up! I will close the whole “campaign” at 1.0200 too. It seems like a reasonable place to put a Take Profit since it is a relevant support level. By then the position will have netted a great deal of pips. My only fear is the recent ranging behavior this pair has presented lately! Let’s hope it finally decides to make that great move :slight_smile: I will keep you updated! Happy trading!

1 Like
23

Good for you! It seems like it’s going your way now. That “Gartman Letter” sounds interesting, I should subscribe to that since I’m looking at commodities most of the time. Thanks for the tip!

24

Yep, an awesome weekend as always! How about you?

Great to hear your short AUD/USD trade already got triggered! My initial short entry on my demo account unfortunately didn’t. I entered half my usual position size at market though, since there’s a nice divergence on the 1h. Hoping this goes all the way down to 1.0200 like you predicted! Snook says “Gartman Letter” predicts a drop in gold prices, so that should be in our trade’s favor.

Happy trading!

25

Yiiiiiiikes. AUD/USD is back above 1.0500 again. Was that a false break??

Looks like it’s still inside the falling channel though. For those who shorted, where did you guys place your stops?

1 Like
26

I don’t know but I entered at 1.0550 with a 30 pip stop that just got triggered. I still feel bearish as long as it stays in that falling channel. Most likely I will short again at 1.0595 with another 30 pip stop. Unless there is a clear bullish continuation of course. I’m using Parabolic SAR, MACD, & STOCH for any reversal at that level to enter. What do you think? Next stop 1.0250?:smiley:

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27

Well, I’m looking at stochastic and it’s showing a bearish divergence on both the 1h and 4h timeframes. That 1.0600 level seems to be holding though. Did your second position get triggered too?

3 Likes
28

I did not take the original Short, so excuse me for lobbing in thoughts from the outside, but my take is: I almost always take my trading bias, my overall position for the day, from the Daily chart. We have been in a sustained uptrend on AUD/USD since the double bottom a year ago. We did have a triangle forming, and we had a lower high, so it appeared that we might be reaching the end of the trend but to me, now, the picture looks more mixed. We have had mixed signals before - a head and shoulders formed in November, for instance, yet ultimately did not deter the trend - so the current two strong buying days, coupled with the low test on Monday, has me reluctant to short this pair right now. If I came to the pair fresh and stood back from my screen with a year or so’s data on there, I would say that we are in a stalled uptrend, which leads to an undecided market. So personally I am now flat on this pair until we get a clearer picture.

Of course, anything can happen, but I am just saying that my instinct today is to stay out and wait for a clearer signal of the overriding market sentiment. I don’t enter trades because of fundamentals (although I might stay out because of them), I much prefer to trade what I see, and the Daily is not giving me much today. Price seems very reluctant to close below 1.0500 and stay there, sufficiently so to be my overriding consideration looking at this pair.

(Incidentally, I did not take the initial short for two reasons - I did not see a close I liked below 1.0500, and I had entered a Long on EUR/AUD, as I preferred that setup, and did not want to double my exposure to one minor currency. My EUR/AUD trade hit my trailed Stop overnight for +0.25%/23 pips, so I am not much liking AUD this week - tough to predict!)

ST

1 Like
29

My second position was triggered. As for ST everything you are saying is for insightful although I have no intentions of closing this trade for the obvious reason that I need to stick to my trade plan. I can only hope I look at the market like you and happy pip do so I appreciate your thoughts. Maybe you could post your next setup on the this pair later on. Thanks

30

Obviously you are quite right, mainly for two reasons - 1) I don’t believe that anyone should ever enter or stay out of a trade because of someone else’s analysis, there are many reasons why it is essential only ever to trade one’s own analysis. 2) Noone is right every time, so Price could drop like a stone as I click ‘post reply’ on this post - it looks a little mixed to me right now, but it obviously has to go up or down at some point!

Anyway, it could be that you already look at the market with as much insight, or more, than happypip, myself, or anyone else - the joy of an internet forum is that we can all express our views with no hierarchy or any of that. When you make a few % on this one, I will be wishing I had not sat on my hands, after all…!!

Good luck with the trade.