Paper trade: Stopped out AUD/JPY longs @ 81.3 (+7 pips) and 81.29 (-28 pips)

By Paul | Published: November 20, 2009

My AUD/JPY long from yesterday got stopped out after I moved the exit stop to a breakeven price.  Then I gave it another try once AUD/JPY had a quick dip and recovered to 81.30 level around Tokyo noon.  That has been a time of large moves recently.  My entries and exits are shown on the 3-hour chart of AUD/JPY in Figure 1.

The problem with this entry is that the downside momentum is stronger than I thought.  While being wrong is perfectly fine in trading, I need to put more thoughts in short-term analysis to improve my probability.

In addition to the analysis which I’ve done as previously discussed for my entry, I am going to take into account yet another shorter timeframe for my trade timing.  Figure 2 shows a 30-minute chart of AUD/JPY.

Referring to Figure 2, the two blue triangles are my entries.  The two red dots are my exits from stops.  In hindsight, my first entry was about an hour early.  Short-term resistance was obvious at 81.60 but there is no short-term support shown.  I should have entered either above the resistance or when we failed to break 81.10 support the second time.

For the next few hours from 12:00 to midnight, AUD/JPY is testing that long term resistance fChannel as shown in Figure 2.  We can see that the trendline is imposing a strong resistance on the pair as it hasn’t been able to hold more than a few bars above it.

The second entry at 81.60 is acceptable.  AUD/JPY tested 81.30 again but managed to jump right back up.  Particularly if we look at the 3-hour chart of Figure 1, it would seem that this is merely a short-term retracement from the 82.00 resistance.  A stop at 81.30 as I have done has limited risk and it would mark the line in the sand.

If I’m to try going long this pair again with this setup, I would use a half sized position only as the setup has failed me twice already.  But as can be seen in Figure 2, AUD/JPY is failing 81.30 this morning again.  This is an obvious sign of weakness in the pair.  So that’s it for me for now to go long in this pair.

A more detailed log of my trades can be found on my trade log page.

AUD/JPY, 3-hour

AUD/JPY, 3-hour

AUD/JPY, 30-minute

AUD/JPY, 30-minute

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