Looking at a weekly chart of AUD/USD, you will see a very nice bearish engulfing candle. It has engulfed the prior two weeks’ candles almost completely. So I think this presents us with a very nice long term opportunity.
Here’s the plan: I propose shorting a break of this candle and the psych level that’s just below it at 0.8895. This should allow for head fakes and false breaks. Your stop loss can be either above the 50% retracement of the candle (0.9059) or, better yet, above the candle if your risk parameters can stand it (0.9210.) I propose targets of 0.8610, 0.8340, 0.8175.
Keep in mind that your stop will be either 150 or 300 pips, so size your trade accordingly. No trade opportunity is a sure thing, so be prepared to keep your potential loss small.
Also keep in mind that we may be in this trade for a few weeks, so BE PATIENT. As Michael Storm says, we don’t get paid to trade, we get paid to wait.
I will be posting my management notes for this trade on Twitter, so be sure to follow me at @IsItCoffeeYet.
May the pips be with you!
Secret Asian Man 😉
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