April 23 started with big moves in the AUD forex pairs, following CPI numbers. The action continued following GBP Bank of England Minutes several hours later.
If you were quick you could have gotten in on the short right after the news announcement (4:30 on chart below). Typically I don’t trade right at news though, so I had to let this one pass by.
The next opportunity came on a pullback. After such a strong sell-off I wasn’t looking for anything fancy, just an excuse to get short and hopefully capitalize on a further decline. I drew a trendline on the pullback and when the price broke below it, I took my short. I placed a stop above the recent high and put a target at roughly 1.6 times my risk. The target was hit about 50 minutes later.
The second trade was a similar set-up– taking a short as the price broke below an upward sloping trendline on a weak pullback. This trade took more than a couple hours and barely budged. I eventually got out of the trade for a small profit after it paused above a prior low, indicating much of the downside momentum was gone.
Figure 1 shows the trades, with the arrows marking the trades and direction and the “thumbs up” marking the exits.
Figure 1. AUDUSD Trades – 5 Minute Chart (prior to London Session)
The next trades came as the London session was beginning.
This pair had been pretty sedate over the last few days, and had put in a lower swing low and a lower swing high over the last day and a half. After a very small pullback I initiated a short trade when a red bar engulfed the prior green bar. A stop was placed just above the recent engulfing bar and a target set at approximately 2.3 times my risk. I choose a larger target for this trade simply because I was expecting an increase in volatility relative to the very sedate conditions over the prior few days.
Figure 2. USDJPY Trade – Hourly Chart
The arrow marks the direction and time of my trade (when the red candle crossed below the prior green candle). A stop was placed just above the recent high and the thumbs up marks the target price.
The EURJPY had a similar setup to the USDJPY trade. There was a sharp pop higher though which quickly reversed, so I assumed the price would continue lower. There was one more whipsaw move though which stopped me out
Figure 3. EURJPY – 30 Minute Chart
GBPUSD and GBPJPY
While there were some GBP trades I wanted to get into, the setups I saw (similar to the AUDUSD trade) formed very close to a big news announcement. I don’t take trades right before a news announcement, since it becomes an almost random on whether the stop or target will fill first. So I left it at that.
The EURJPY trade was a bit impulsive, and it resulted in the loss. On the other trades I waited for a pullback and move back in the trending direction. On the EURJPY I just jumped in and left myself vulnerable. Most importantly, that type of trade isn’t part of my trading plan, so it was an error resulting from a momentary lack of discipline. Luckily the damage the small, and with the other trades the day is still profitable. Overall there was some good movement, and it is continuing in the US session.