I wrote yesterday that I wouldn’t trade AUDUSD because it didn’t drop to its daily uptrend line at .9090. Although it came reasonably close at .9132, it’s about drawing your lines in the sand. Am I glad I didn’t? Of course, now that the low this morning has been .9061. But what if it had gone up from .9132 instead of down? Then it would have gone up without me. Some trades get away.
But now the pair has my attention and a decision may be near. It broke its trend line but hasn’t had a close below that line on the daily, 3-, or 1-hour charts. Looking at the hourly chart offers no clue that this move downward is over. On the 15-minute chart, there’s finally a candle that’s indecisive. That’s not enough to enter a trade. The daily trend is still up but there are now clues on the 3-hour chart that its trend may be reversing. Adding to this is that .9115/20 was polarity and it did close below that on the hourly chart. So going long at the moment is problematic.
I’m not ready to short, either. First, I can’t catch a falling knife if it continues to drop. I need a rally with signs that it’s just that.
What would convince me to try a long is a momentum push as represented by RSI. That would take a definitive close on the hourly chart with a bullish candle and RSI being greater than 30. We’ll just have to wait and see. Here’s the hourly chart:
© Dianne Fecteau, 2009. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.