In a surprising move to most market participants, Reserve Bank of Australia left its benchmark interest rate unchanged at 3.75%. Just about everybody expected another hike of 0.25%. Interesting change of heart by RBA. After all, it was the first central bank to start bumping its overnight cash rate last year. And not once, but three times, creating speculations that other central banks would follow. So far it hasn’t happened yet and this could be the reason behind today’s decision. Perhaps they didn’t want to fuel the “carry trade” in AUD any more, in concern of too much appreciation?
Whatever the reason, this worked out good for me. The Aussie had been advancing all day long before the meeting, only to fall rapidly on the announcement. This brings an interesting question to mind. Would it respond strongly the other way, if rates were raised? My personal view is that reaction would be rather flat, surprising people once again. Of course, it is only speculation and something we’ll never know. At any rate AUD dropped like a stone, helping my struggling trade in Swiss Franc cross.
I have been following AUD-CHF for about a week now, looking for a move through the support at around 0.9335. My exact entry was 0.9331. A smaller trade within congestion area was taken but the main one was not filled until early trading after Sunday open. Market turned against me and stayed that course until rate decision hit the wires.
As stated at the end of last post, my expectation was that a minor high at around 0.9440 would provide enough resistance to hold the advance. Also, 100 SMA on 4H chart happened to be right there and I use it as support/resistance indicator for trades, especially in combination with other factors, like highs/lows. That’s where the price turned after news release, keeping me in this trade. Currently trade is at about break even. I don’t expect a nice clean move any more, although it would nice, but rather this choppy, multi staged and slow progress. We shall see.
Another currency pair I have been keeping eye on CAD-CHF. Here also intermediate term chart has been used. Main support is at around 0.9775 and I have a sell order few pips below. Price is within a congestion zone, far away from intended entry. Few days ago I took a small trade and today I’m doing it again. Sell was initiated at 0.9973, with an objective 0f 0.9900. If this happens, and I like the way things move, I might consider holding half of it for 0.9800 target. For now order is set to close half at 0.9900. Main sell order at 0.9767 is still valid, but it is clear that no speedy outcome should expected.
Mike K.
Mike, do you know anything about a software called USDBot? It is supposed to be the newest fx robot and I’m wondering if it’s any good? Any thoughts?
No I don’t know anything about this product. Sorry.
But do you think it is a good way to trade, using robots? Opinions vary from wherever I look, some claim they work, while others say it is all BS. What do you think?
Hi Mike,
What are your thoughts on EURAUD, I got triggered on long EURAUD at about 1.5807, currently down by about 70 pips, my stop loss is about 100 pips, but it seems it still has upside potentail
Regards
Alto
Alto, 1.57 seems to be are to watch, specially if it happens over next few hours. Intermediate term is still up, but the pullbacks are deep, which makes it difficult trade. It is not unusual, markets often do it. Problem is, that logical stop, minor low, is under 1.56. That’s why I’d watch 1.57 and see on smaller time frame if it wants to reverse in that area.
Norm, there is nothing wrong with automated strategies, but they have certain shotcomings. The are designed to exploit ceratin market conditions and do it over and over. Problem is that whenconditions shift, you can easily be in a prolonged period of underperforming. Unless you can see data showing how deep the drawdowns were in the past and how long they lasted, you have no idea about resonable expectations. Another thing, if any of these “robots” claim they have no losing periods, I’d very sceptical. No such thing.
Hi Mike ,
I’ve been scalping the AUD/USD pai on OANDA . I’m trying FXGame first . I open a long position for e.g. 20,000 units at 50:1 with $2000 AUD in my AUD denominated sub-account. A green line appears showing when I will automatically take profit . The line shoots up past the green line ( in fact past 2 green lines ) but they don’t disappear and the positions stay open . Any reason for this and is this how FXTrade is ?
Thanks for any help .
Regards,
Peter
Sydney,Australia
No, it doesn’t happen in FX trade. When markets are moving very fast, you could possibly get some slippage. One thinkg to look at is see if partial positions were closed. At any rate, OANDA has users forums and one of them is devoted to technical issues and should be helpfull.
http://fxtrade.oanda.com/community/forex_forums
Hi.
My blog ‘The psychic analysis on Forex’ is also a Forex blog thou it is in russian language.
I invite your to be each oter follwer or exchange links – this can be a positive for both.
With kind regards.
Ivan.
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[...] cash rate from 3.75% to 4.00%, or 0.25%. Move was widely expected and came as no surprise, unlike a month ago when officials took no action and Australian Dollar fell sharply. Analysts are calling for more rate hikes in the future, citing strong job market down under [...]
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