AUDUSD declined during the latter part of last week but it still has not made a definitive move. The pair has been moving sideways, from .8905 to .9408, for the last eight weeks. It’s currently near the low end of the range with a low this morning of .9053. It may be headed back to test that low again. That point could be a decision time. Is this a more serious correction or is it a good place to go long?
If someone attempted a long at .9053, the stop should logically be placed below .8947 (106 pips) or below the range low which is .8905 (148 pips). That might be a bit much for some people’s taste. If so, then there are two other choices. The first it to wait to see if it drops to the bottom of the range, going long around .8945. The other possibility is to wait for an upwards breakout, probably above .9172. This is much safer than trying to call a bottom. It would obviously also require other confirmation. If it begins to approach that point, I’ll post.
For shorts, a break below .9053 might be worth a try. Alternatively, one could wait for a rally to .9108 and, depending on price candles and RSI, try a short there. The pair has been top-heavy and it has broken and closed below its daily uptrend line. Here’s the 3-hour 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.