AUDUSD—gearing up for new lows?

I'm out of both of yesterday's trades at +57 and +55 pips respectively, having hit their erroneously set profit-targets (in other words, I was moving too quickly when I placed the trades and didn't reset my default profit target field). No harm—you can't go broke taking profits as they say but now I have the issue of having to get back in if I believe the pair is headed lower. It reached a low of .8858 in yesterday's trading so a break of that might be a good point and it would be just below the doji hammer that formed on the one-hour chart. Otherwise, I can see if the current rally is going to have any legs and try for a short at some point. Regardless, I think there's downward pressure on this pair and shorting is the way to go.

Resistance is at .9048, .9071, and .9093 but I think those numbers are unlikely today. Support is at .8858, .8785, .8722, .8578, and of course the unlikely .7216 (a long-term uptrend line on the daily chart).

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.