Trade Idea: 2012-12-13 01:00
Looks like I’ve missed out on all those great yen moves! Nevertheless, this just goes to show the beauty of trading the cross-currency pairs - there’s just so many of them!
Check out this simple setup that I found on AUD/CAD!
The pair has been trading within a range of just 80 pips for the past three weeks now, bouncing between resistance at around 1.0410 and support at 1.0330. With price action now approaching the top of the range, this could be a good time to set up a short position. Besides, the holidays are less than two weeks away, and I don’t think we’ll see any strong breakouts, which should keep this pair in consolidation mode.
Looking ahead, I think the main reports that I gotta keep an eye on are the RBA MPC meeting minutes (next Tuesday) and the Canadian retail sales report (next Thursday). Both these reports can potentially wreck havoc in the markets, so I’ll have to plan accordingly if my trade is still open by next week.
For now, this is how I plan to play this setup:
Short at 1.0400, stop at 1.0440, take profit at 1.0330.
This should leave me with a pretty solid reward-to-risk ratio of 1.75:1. My stop loss is also quite a bit above the resistance line, so if price does hit it, it may signal that a breakout is in the works. As usual, I’ll be risking just 0.50% of my account on this trade.
If you guys have any comments on how you’d play this setup, leave me a post on this thread. I’d love to hear from y’all!