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.
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 
I will keep you updated! Happy trading!
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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!
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!
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?
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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?
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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?
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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
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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
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.
I have to say I am quite disappointed with this trade as I never got confirmation on a reversal from my indicators. Maybe even a buy opportunity for some of you out there as there was a pretty bullish candle that broke through my descending triangle trend line although I would play it cautiously. As for me I need to take a breather and set up something a little more solid.
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Had Price not made a lower high on the Daily then I would probably have gone Long on the close of Monday’s bar, as you suggest, it being a low test into an area of Support, which corresponded with the 100ema and the 38.2 Fib level, but as we said earlier the picture was pretty mixed so I did not take it.
Very sorry to hear about your trade, but it was a credible setup, the market just doesn’t care, sometimes. Our strategies are quite different, perhaps, as that was quite a tight Stop, but the upside of that is that you don’t have to be right as often. So there will be plenty more fish in the sea, we all take losses so as long as we keep taking sensible setups it does not matter.
Sums up why I don’t use indicators, though - for me, they are just another thing to confuse the chart, and they are by no means always right, so I prefer to lean on a naked chart and some PA analysis. Emas are as close to indicators as I get, and that is because I like to see what Price has done previously, so I think of them as an historical data analysis tool, rather than an indication of what will happen next.
Sorry it did not work out this time.
ST
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I was stopped out with -30pips. No big deal in the grand sceme of things as my account is intact and I’ll be around for awhile. after looking at this from a loosing perspective, I remember saying that it looks to actually break above the descending triangle, and so thats kind of what it did. So my re-evaluation is that I should have listened to myself and went long yesterday morning not short.
Now that I take a step back and look at the daily chart, it looks to me that this pair is going to go in a downward channel at least in the short term, but it doesn’t look like it’s going to be a clean break to the downside, it looks more like a very slow curving downtrend. But I’m not sure how long that will last. So now, I’m just going to sit and watch and think and learn. I won’t place a trade until next week at the earliest given no big data is coming out of Aus this week and nothing from the US side that makes me want to play. So I’m going to watch where this pair ranges the rest of the week and see if next week brings a clearer picture.
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Yep, don’t sweat the 30 pips, snook! Aside from the downward channel that you spotted, there was also a nice bearish divergence, and even a nice overbought Stochastic signal on the chart. Hopefully we can get a clearer picture next week with lots of big U.S., Australia and Chinese data scheduled for release
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Sorry about the 30 pips, but personally I really would not short AUD until we get a concerted break below 1.0500. Each time it has been tested, recently, we have had a low test on the Daily and then Price has been thrown back up. We could be approaching the end of the uptrend, but this week has demonstrated that we are not yet in a downtrend - anything could happen. For me, the risk of giving pips back to the market is too high to short this pair until we break that Support. Until then, for me is is Long or stay out - even the current range is too new for me to want to trade it.
1.0750 looks like it’s holding… for now. You think it’s a good time to go long above the resistance? We can put a pretty tight stop and then target previous highs if risk rally persists till next week.
O.K. Simon let me ask you (or anyone) this. (ST seems the very long term type trader so I wanted his thoughs.)
As a long term trend this pair has been going up for the last 2 years. From a pseudo-Elliot wave pespective, the time period from April 2011 to present has a consolidation/4th wave look to it. So I think I understand what you mean by not shorting this pair given this 2 year trend. That being said, is this now a wait and buy dips back to the 1.0500/1.0450 level if there is any trade to be made?
I feel a bit overactive in the Comdolls threads but it’s because as a newb I’m using the AUD,Kiwi, and CAD against the USD because they seem relatively straight forward to trade off of, and they tend to be highly correlated in thier movements and that makes for good predictability for my young trader mind. I am fishing for insight because I’m not happy with my 40% success rate that I’m currently trading at. And you guys are clearly more successful than I am so thanks for all of your help. Once I get better I’ll help you as much as you have helped me and maybe together we can form a “Comdoll” community with a 80% success rate!
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Hi happypip, sorry to be slow responding to this - builders and small children here, distracting combination! The way I see it, we have not a concerted break above 1.0750, yet. I have had a Resistance line on my chart just above that level for some time, there was a run at it 21/22 April, at which point it was an all-time high for the Pair, then we had the break through and run up to (a whisker over) 1.1000, but since the big sell off on 11/05 (11th May, I’m a Brit!) we have been stuck back below 1.0750 with a few tests of it but no concerted break through.
As we are near the all-time high for the Pair, I would not be looking to go Long with an initial TP of over 1.1000, and it is likely that 1.0000 would give the market serious pause. So I would be looking for quite a conservative Entry to any Long position. So personally, I would want to see a close above 1.0750 on the Daily chart, which might lead to some immediate upside, and then a retracement and retest of the 1.0750 level. If we got, say, I low test into that level but with Price opening and closing above it, then I would look to go Long at that point, following it up to parity or so - room for 200 or more pips. Right now, my instinctive bias is Long, that is what I am looking for, but I am not placing until we get the break of 1.0750. So it is a watch and wait for me at the moment.
Obviously this is all guesswork, but I don’t have enough reason to go Long just yet.
ST
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Hi Snook,
I like the sound of your master plan to build an 80%-successful Comdoll community - count me in!!
First up, should say a couple of things: I have been trading under two years, so am not a wildly experienced guru myself, although it sounds as though I am a little further down the road than you, maybe. Also, I am afraid that I have never studied or traded Elliot Waves (although I am famililar with the principle), so my answer will inevitably be a little generic, rather than tailored towards Elliot in particular.
I should also add that I am not solely a long-term trader. Most of my trades are placed off the Hourly, 240 and Daily charts, lasting up to three days or so. I look for setups before I look for duration, timeframe etc.
Certainly I agree that we have had a sustained uptrend. Indeed, one could argue that we have been in a consistent uptrend since the double bottom bracketing Summer 2001, aside from the major selloff in Summer 2008. However, with the recent high having been the all-time high for the Pair, we are now in something of a transition phase - will Price go on to make higher highs, continuing the uptrend, or is there no appetite for a better-than-1.1000 value on this Pair, in which case we might see a selloff from current levels? I believe that it is that question that is being played out currently, and that has caused the current consolidation. Price has basically spent the last two months ranging between around 1.0500 and 1.0750.
I believe that the key to successful long-term trading (as in trading successfully as a career, rather than individual trades lasting a long time) is to minimize risk as far as is practially possible. I trade a number of different currency pairs principally in order that I might take only the higher probability setups. I still have losses, inevitably (such as an abortive EUR/JPY Short yesterday lol!), but I try to take really clean setups.
So my simple answer to your question is yes - the safest way to trade this Pair currently would be to wait for a confirmed close on the Daily chart either above 1.0750 or below 1.0500, then watch the initial move, wait for a retracement to retest that same level, then trade that move away from the S/R level. A slightly higher risk Entry would be to trade the break of the initial close outside of the range, but often there will still follow a retest, so there might be some nervous moments! The advantage of this more aggressive Entry is that there is not always a retest, simply an aggressive move, which you could catch while those waiting for the retracement would have to sit on the sidelines and watch you make a killing. But in either scenario, it starts with waiting to see where Price goes.
Some people would trade the current range, but for me it is not sustained or clean enough for me to want to trade it right now. Last month’s Monthly Pivot comes through around 1.0705, which has affected Price, and this month’s will be lower, so that also mucks up the range a little. If the range lasts a little longer, I will look at trading it. Today’s Daily might close with a high test off the 1.0750 area, some will trade that, although I won’t, with it being a US Bank Holiday on Monday. (If you want an example of a range I have traded, a few of the CHF Pairs earlier this year gave some good pips, CAD/CHF Daily is one example, I think from memory around November 2010-end of February this year, the range was giving 5% trades).
One final thought on AUD - if you look at the Weekly chart and put on a 20ema, you could argue that there is a strong upward trendline and we can expect Price to rise and break the previous high at 1.1000 to form a new all-time high. I don’t know what will happen, obviously, but there is enough doubt that I am staying out until things become clearer. We need to see whether the market has the appetite for new highs, or whether it will be more comfortable at a lower level. We can trade it regardless - the joy of Forex!
Anyway, with apologies for the extremely rambling nature of this post, I hope that some of that was of interest to you and in among the waffle I have given you one take on your question. I am sure that others will have their own views!
ST
Thanks ST, thats alot of help, I’m looking to gain insight from experienced, successful traders, even if you have only been doing this for a few years. I’ve gone through all of the aquiring of information on “how” to trade forex but I’m trying to hone my entry points. I’m finding that I don’t always figure out what a pair is about to do (who does), but I’m more right than wrong. My problem seems to be picking entries or setting my stop too tight. Sometimes that has saved me other times I have watched my stop get hit and then 24/48 hours later my TP would have been hit. So I am trying to focus on my entry point as that will probably get my success rate up to 50% and from thier my risk management will get me back into profit. So your post helped me hone, and for that I am grateful.