We are forced to revise our AUD view as a result of very strong data and global sentiment for the region.
We have taken a Long AUDUSD .05 (5%) at .8700 and AUDJPY at 77.00 with tight on today’s pullback resulting from Bank lending news out of China. It is a small position as we proceed with caution at the high end of the trend looking for a decline in the coming weeks/months.
Position entry is often at or big figures +10-15 pips, as these are areas where we often see shifts in flows and options protection.
As traders, our view of the market can change quickly. A killer of many traders is to stubbornly remain fixed on a view when all signals are confirming otherwise. In the current case of AUD we have considered the following in our change of view.
Recent data heavily supports AUD:
1. Trade Balance 1.65B vs 0. 53B expected
2. Hawkish statement
3. Employment change 45.9K vs 15K expected
4. Unemployment Rate 5.1% vs 5.2% expected
5. China Trade Balance 20B vs 15.3B expected
6. Home loans 1.9% vs 0.7% expected
7. Relief rally in equities and stable markets
8. Market expectation of further rate hikes widening the IR spread (this will likely be put on hold if equities fall and global economies contract in the coming months, a scenario we are preparing for)
CAUTION – China and this week could have significant impact!
The AUD is likely near the end of its medium term rally, so we take conservative long positions on pullbacks. In the event of aggressive risk averse moves, we remain on hold until the move begins to slow.
The USD index still has room to see the USD lower which throws caution to moving into USD longs too soon on this cycle.
Our longer term goal is to wait as long as necessary for AUDJPY, AUDUSD, NZDUSD to move materially lower to take on long positions.
Good Luck with your trading and be careful out there
Results 1 to 10 of 11
07-13-2010, 05:20 AM #1
July 13, 2010 – AUD potential for more leg’s near term.
07-13-2010, 06:00 AM #2
07-13-2010, 05:15 PM #3
07-14-2010, 12:08 AM #4
07-18-2010, 07:21 AM #5
07-22-2010, 08:05 PM #6
07-28-2010, 11:30 PM #7
07-31-2010, 06:39 AM #8
08-14-2010, 09:50 PM #9
08-30-2010, 11:58 PM #10
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