AUDUSD TRADING STRATEGIES

Sophia Todorova has a background in teaching and psychology, and as such relishes the idea of assisting new traders on their journey to Forex trading success. Technical Analysis is her passion. The charts speak, and she listens.

 

The Audusd currency pair has been ranging inside a daily pennant for several weeks. The chart below also shows some mid-range support at parity level (1.0000) Based on my usual method of trading pennants, I require the triangle to narrow down towards the tip of the range, where a resulting breakout would be higher- probability, with less chance of being a fake breakout. I will also look at the alternative. Due to the choppiness of the smaller timeframes, I have decided to concentrate on the daily chart. Although the weekly gives the impression of higher highs in store, since forming double tops, those higher lows might very well only be due to the ascending pennant on the daily.

Here is my plan of action for this pair:

TRADING STRATEGIES

(1)

 

My primary outlook is for a short from these levels, as I believe the pair is very extended, and due for a correction. In reference to the labeled chart below, I am looking for a breach of the pennant support line, and a bounce back up towards the broken line for a retest. Here, especially if the pennant breaks out without first performing the narrowing effect, I will wait for a bearish reversal pattern to set up (bearish engulfing bar(s), tweezer tops, etc) before shorting. Potential targets, based on past areas of support are: .9825, and .9610. The safest placement for a stop-loss, in my opinion would be at the opposite end of the pennant range.

 

 

(2)

In the event of a bullish breakout, the plan would be the same, in reverse. However, the targets could be identified with the use of fibonnacci extensions, as well as price action.

 

(3)

There is also the option of trading the pair inside of the range by buying at the pennant support, and shorting at the resistance line until the anticipated breakout occurs.

Thanks for reading, and please do share your own perspectives on the pair. Safe trading!

 

Thanks for reading, and please do share your own perspectives on the pair. Safe trading!

 

 

If you are interested in trading this with me, it is a good idea to follow me on twitter, since I am able to give quick updates there, and you will be able to get them instantly.

When trading always use a stop loss and calculate the proper risk management for your account. This analysis aims at providing assistance to the forex trading community here at Winners Edge Trading, thereby helping them to make informed trading decisions.

 

Other useful blogs:

 Forex Crunch: Eurusd Mar. 8- Falling Back After Failed Breakout

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