AUDUSD—rebounding

After touching a low of .9537, the pair bounced smartly to a high this morning of .9824. This pair loves to go up. So even though there's some bearish pressure, back up it goes. It looks as though it may make it past resistance of .9817 and .9853 (needs a close above on at least an hourly chart). If so, eyes are on .9954. Why? From the 1.0183 high the pair dropped to .9725. It then bounced to .9954 which was a 50% retracement and failed. This suggested a secondary top. So if the pair gets back there, interest will be high.

I went long at .9602 earlier this week after a hammer and a bullish engulfing candle on the hourly chart and because I'd identified support at .9540 (see 11/29 blog). I meant to update the blog but time got away from me and, as I've written before, I can't post everything or I'd never get any trading done. I just took partial profits at +203 pips. At that time I suspected it might go as low as .9408 before rallying. Obviously it didn't. We'll have to see what happens at .9954 if it gets there. It probably won't do so this week.

So being long, do I have any bearish sentiment toward AUDUSD? Yes, I do. As it is now (at 7:30AM EST), the pair is going to have a weekly close with a lower high and lower low than last week. This comes after a week with an outside candle so the overall look is bearish. I've also been comparing AUD to CAD and AUD looks weaker. Finally, on the weekly chart below, you'll notice three uptrend lines, each starting from a higher low. This won't continue forever and this most recent pullback came close to violating the most recent one. RSI also has some interesting behavior, as to numeric levels and as to trending. But as I wrote this past Monday, "the size of the rally from the 2008 low is significant." I've made a lot of money going long in this pair over the past year and it's an overall uptrend until proven otherwise.

Here's the weekly chart. My trades don't show on the weekly chart as I use a different charting package for longer term charting. I'm looking to make a change in 2011 to that approach but we'll see. One gets in a rut with one's broker.











© 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.