- Euro has been the only currency the is sentimentally bullish at this moment with no significant movement from ECB; meanwhile, AUD is in the negative sentiment because of the RBA rate cut probability.
- The catalyst is the rate decision which usually will produce a large movement, normally we don’t enter any trade prior to this kind of important release but it really depends on the probability and since market is placing over 60% of chance for a rate cut, you could take this opportunity for a day trade play to avoid noises.
- We’re still in a lower range in our daily chart so if AUD does cut, then we have a lot of room upside.
- The risk of course is if RBA does not cut the rate or if the statement is hawkish. This is really the bigger risk because you might get in prior to the rate decision at the highest spot but then lose the whole trade if the decision is a rate hold. You can minimize the risk by not taking the trade which I personally will not take right now, but instead, I’ll watch out the supposed daily trade entry later on in pre-London Session and if the decision is a rate cut, then i’ll get in at those levels.
- If i’m in, I’ll then switch back to daily view and manage it accordingly to the trend.
- This is a good trade to enter but too late to enter now if you want to trade into the news, so i’ll only enter after the release.
Enter @ 1.4843
SL @ 1.4573
lot size 50K
lot size 85K
alternative pair will be short AUD/JPY
because JPY is still in a good sentiment from last week and no further easing measure has been announced for now; and same thing goes to AUD - if the rate is cut, then we have a valid trade, if not, we don’t.
The risk will however be higher for AUD/JPY because of the natural carry-trade position for AUD & JPY and that’s why we prefer EUR/AUD.
On the other hand, the range is a bit larger and you might see more movement in this pair.
So if you like more action (but also more risk) then AUD/JPY might be good for you.
Enter @ 77.40
SL @ 80.20
lot size 50K
lot size 85K
AUG 2ND -
RBA cut the rate to 1.5% and we saw an initial movement upside, however, the short-sellers soon covered and with fundamental buyers for AUD, we’re now in a drawdown of this trade.
I got in with an intraday trading and got stopped out.
If you’re not in yet, I’d not recommend buying because there are other opportunities.
If you’re already in at our above recommended levels, then don’t panic, I will still hold it because
- EUR is still in a positive sentiment in comparison with other currencies.
- AUD is still in a negative sentiment not only the rate cut decision, but also the statement which signalled the further easing is possible as long as the inflation continues to be low and also the housing market risk has decreased; so no reason to be concerned with further rate cut.
- Technically we’re indecisive and haven’t even toughed previous daily low. All these just signal that the pair could still go upside.
So in conclusion, if i’m in, then there is still more odds for this to go up and there is no particular reason for me to get out at this point. So keep holding.
As for AUD/JPY, i should have taken this but i was uncertain about the stimulus package from Japan. The package had come out and is in line with the disappointment of the market, we will continue to see strength in JPY.
If you’re not in yet, I’d not recommend to get in now because you’re selling at low and better to wait for further retrace.
If you’re in already, then you should be in profit and I will consider adding in the following levels and SL
Add again @ 76 with new SL (for all entries but only move if your second entry get filled) @ 78.80
*remember to be careful with your risk exposure and always risk what you can afford to lose*
AUG 3RD -
AUD is relatively unchanged but we have negative selling into EUR today because USD gained strength.
USD might continued to gain strength into tomorrow’s BOE meeting.
If BOE cur rate, then USD will be large buying so does JPY which will help our AUD/JPY short trade but not so much for our EUR/AUD trade.
If you’re still in EUR/AUD SHORT trade, I’ll tighten up the SL to 1.4640 to reduce my risk.
If you’re still in AUD/JPY trade, I’ll hold the trade and my pending add and i’ll be more confident to hold it through the weekend.
AUG 4TH -
if you followed my direction of tighten up the SL, you should be out by now.
Although this is a losing trade, you actually saved yourself from the original stop loss of 67 pips.
Because of the same strength in both sentiment now especially after BOE rate decision and providing next week’s NZD rate decision might cause another risk off sentiment. I will probably not add on to this trade as before and remove my pending add @ 76.
If I have another choice with either LONG AUD or LONG JPY, I will probably just close this trade for now as i don’t see it goes anywhere significantly. NO point to be exposed in the risk.