China gives AUD the shove the RBA has been waiting for
AUDUSD is playing a textbook break from the 0.7500/35 level. We had the first move down
The initial gap down on Monday held at the 0.7530/35 area to mark the firs confirmation, and then the yesterday's break of 0.7500 found the big figure holding resistance on a re-test. The next new low at 0.7400 saw that 0.7500 resistance step down to 0.7480, then 0.7460, and that's been enough to see the pair capitulate down through 0.7400
AUDUSD 15m chart
At the moment we've broken resistance that was trying to build around 0.7400/05, and if we can hold above there then the buyers are in with a chance of pushing back the sellers. 0.7420/30 will be the next fences they need to get over
My first target for my shorts was a move to 0.7269, which was strong resistance through the latter part of 2008, followed by the Aug 2001 support line down near 0.7100
AUDUSD weekly chart
Given the current volatility, and the strength of the bounce we saw from 0.7400 yesterday, I'm not going to look a gift horse in the mouth so I took some of the position off at 0.7400, obviously and typically missing the move to the 0.7372 lows
We are seeing increased volatility, particularly from China and the moves in stocks over there, and the RBA is still keeping the verbal pressure on. That means that big moves down can see equally big moves up if the news leans that way. That makes it more important to take some profit on a decent move when you can. I'm trailing my stop down so am locking in further profit and will look at re-shorting up at 0.7500/35, depending on the reason for the move back up there
Exiting a trade can be a lot harder than getting into one. The psychology kicks in and the fear increases that you may give back whatever current profit you're sitting on. Even with an stringent exit plan it's wise to remain flexible and there's never ever anything wrong with taking all or some profit, even if you then watch it go further in your direction