There is no shortage of predictions or analysis on the Audusd currency pair; I do not presume to know what is going to happen in this, or any other pair for that matter. The best I can do is to pay attention to the patterns that are showing up on my charts, and to be open to the possibilities. It is this which allows me to make trade decisions, or to identify potential trade opportunities as they begin to set up. These patterns, or signals occur in the market day after day, minute after minute.
Last week I did an analysis on this pair. In that article, I pointed to the fact that on the monthly chart, price had been resting against a trendline. I also stated that the trendline had provided strong support in the past. Since then, as I’m sure we are all aware, that trendline broke down without any apparent problem for the bears. The momentum with which it continued to fall throughout last week had been fascinating to watch. Undoubtedly, many took profitable short trade setups and were paid quite well.
Although many may think it reckless to even suggest longs on the audusd during such an obviously strong bear market, I believe that this pair has begun to show signs of a good retracement in the making. On the monthly chart below, the horizontal line indicates an area where the market stopped and bounced on Friday, after making a low at .8071, and closed at .8308. Merely scrolling across to the left of the chart will show past areas of resistance where the market reacted in the past. From what we know of resistance/support, once they have been broken, they in turn become support/resistance.
With this evidence in mind, I would be totally at ease to buy any long setup I get on the smaller timeframes. The one hour timeframe shows a trendline break to the upside, after which it settled in a minor range. I have two suggestions on trading strategy: (a) Buy at the open on Sunday, with a stop loss below the support at .8200, targeting, first .8400, and if that breaks look towards .8520. This option is a bit aggressive, so only do it if you are completely at ease with it, or try trading it on a demo account if you are a forex beginner. (b) Wait for a full- bodied closed candle above .8315 to buy. If the candle is too long, look to get in on a retest. The stop-loss and targets are the same for both scenarios, and personally, I like to scale out of my positions in thirds.
Remember to trade with appropriate lot sizes for your account. Account preservation is key.
All the best for the coming trading week. Trade Confidently.
Latest posts by admin (see all)
- Trend Analysis in Forex- It depends on how you trade… - August 21, 2017
- Forex Entry Methods- Where and How - August 19, 2017
- Find Opportunity in Forex, a Complete Guide - August 18, 2017
Winner’s Edge Trading, as seen on: