AUDUSD--ready to turn down?

If one looks at the daily chart, one sees that the pair made a low of .8578 which is exactly where the daily 200 SMA came in. That, with the doji that formed on the low, hints that more upside could be in the cards. A look at the 3-hour chart, however, shows something a bit different with its ABC correction. The pair also seems to be stalling at the .618 retracement of the move down from .8916. Given those two things and what I believe to be overall weakness, I just shorted at .8743. The entry is good because I can have a tight stop.

Support

.8735 (Dec. low)
.8614 (last swing low)
.8578 (Feb low)
.8569 (Oct. low)

Resistance

.8798 (yesterday's high and .618 retracement)
.8916/30
.9000/48

Here's the three-hour chart:



© Dianne Fecteau, 2010. 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.