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.

1 comment:

adan said...

todd, very nice post

liked how you laid out your thoughts, explaining why you would prefer aud/usd, or gbp/usd, over eur/usd

also, how and why you chose your buy stops

and, your thoughts how you wished to be prepared if the new dollar and market trends got "aggressive"

nice work, thanks!