Monday, December 8, 2014

8 Dec 2014: AUDUSD daytrade #2

This trade was a bit iffy. Retail sentiment on the AUDUSD was still significantly bullish (65%) so I was looking for shorting opportunities. Price had risen to an obvious intra-day support / resistance level and stalled for a few candles.

I was aware of the strong upward move to the resistance level. I checked to see if it was news driven (it wasn't). When I concluded that the upward move was purely speculative, I thought it might be trappable. The two bearish candles at resistance gave me an opportunity to go short at a cheap price. I was aiming for a reward between 1.5R and 2R.

Price fell a bit after I opened my short, but then it stopped for a few candles. I'm always of the opinion that a winning trade should move in your favour quickly. When I saw that price couldn't break the low of the second bearish candle, I chose to take profit at 0.75R. It was half of my intended profit target.

As you can see, price eventually fell, but only a bit. It bounced back and resumed moving upwards and would've taken out my stop loss.

One thing to be mindful of is the 60SMA on the 5M chart (the dotted purple line). It was changing direction, and moving opposite the SMAs on the H1 and H4 charts. I should be more wary next time. This trade wasn't a high probability one (upward move to resistance was strong, 60SMA was turning). Due to good trade management, I managed to get out at a profit. 

(click to enlarge)

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