Staying on the Right Track

The AUD/USD long trade I entered two days ago is going quite well, so far. I'm up 120 pips right now, but am not ready to take my position off just yet. Sometimes, these rallies can just keep going and going without coming back enough for another favorable entry point. In this case, I'll raise my stop to around the 0.9140 level, hence, locking in 70 pips of profit if the pair decides to come crashing down. If the rally continues, I will raise my stop once again.



The worst part of trading is being right and NOT making money, or worse, losing money - although certain people would argue that there is no difference. So, keeping true to that rule, since I am already "right" on this trade, I will try to stay in it without risking the rest of my profits (by raising my stop-loss). This way, if the pair has another big up day or more, I will still be on the train...

Going in the Right Direction - USD Weakness

With a rate hike coming out of the U.S. basically being completely ruled out for the remainder of the year at the very least, there is little reason to own the USD right now, unless panic sets into the global markets. If there is even the slightest risk appetite out there, the USD will depreciate.

I bought the AUD/USD this past hour is the hopes that it will continue its bullish trend, which has been in effect since the beginning of the year. I'm risking 100 pips with a potential reward of about 700 pips, based on the previous high off the weekly chart (shown below).

Wednesday's retail sales numbers have modest to weak expectations, Thursday and Friday's CPI, Industrial Production and U. of Michigan Confidence reports also do not show any promise of bringing the USD higher. However, these reports should bring some momentum to the forex world and, hopefully, push my positions in the right direction.

Language Worth a Thousand Pips

Aside from Durable Goods and New Home Sales figures due out this Friday (both have positive expectations), the FOMC is expected to announce the Fed Rate this Wednesday, which is widely expected to remain at 0.25%. I'm not sure anyone on the planet expects rates to actually be hiked this Wednesday, however, there is debate about the language that will be used. The transcript to every Fed rate decision is carefully analyzed for certain key words that may have an enormous effect on the equity and forex markets. If the Fed's commentary is somewhat hawkish, signaling that a rate hike has moved up in its timetable, then the status of the USD as a pure "safe haven" currency will begin to diminish, and it will once again be looked upon as a high-yielding currency where investors can park their cash. This would undoubtedly begin a change in momentum for the USD against some of the majors, particularly the EUR and GBP. If the Fed makes it known that rate hikes will begin soon, the EUR/USD can easily come down from it's current 1.4600 level to the 1.3 level within weeks or months. If not, the current USD bearish trend may very well extend through the remainder of the year.