Tuesday, November 16, 2010

AUDUSD—interesting chart

The three hour chart for AUDUSD has some interesting features.

First, both price and RSI have broken below their rising trend lines (drawn in red) which is bearish. Note, though, that price is near a fibo, a fib confluence level and a price support. The pair looks as though it is in the fifth wave of five waves down from the 1.0183 high so one would expect a correction. There is also positive divergence (lines drawn in blue) which hints at a possible bounce. With all this I'd look for a bounce to 9852 to 9944 (I know, a pretty wide range but this isn't an exact science—closer targets may be found during a bounce on shorter-term charts) at which point, depending on momentum, I'd try another short. If it doesn't get there, closes below .9785/50 would hint at lower lows, first to .9650 and then .9406.

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.

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