Wednesday, January 20, 2010
AUD/USD and GBP/USD Currency Trades
Just wanted to let everyone know that I'm currently flat on currencies, but just put in two orders to get short the AUD/USD and the GBP/USD if they break beneath today's lows. My thinking is that I want to get long the US dollar, and I usually do that by shorting the EUR/USD. And seeing as that it's possible that the EUR/USD is about to tank hard along with equities in an extended 5th wave, or even possibly a 3rd wave, I want to make sure I'm long the US dollar in some way. But the EUR/USD pair has fallen too much at this point to jump in right now. But by looking at the the GBP/USD and the AUD/USD, it's evident that they have not fallen nearly as much as the EUR/USD so perhaps there's a good trading opportunity there because risk is well defined and not as wide as that of the EUR/USD.
I don't want to enter short these pairs right now because of the late day strength we had in the pairs and the stock market; it may mean that another rally phase is underway. So I just decided to get short if weakness continues because it may accelerate aggressively soon. So I put sell stop orders in for the AUD/USD at 0.9060 and for the GBP/USD at 1.6235. My stops are listed in the attached charts, and I will look to lower those stops as soon as I can if my orders execute.