Posted by: joetradingplace | January 25, 2013

Aussie Setup Thought process

Watch how I have walked you through a trade on Aussie, I will compile all the posts on the trade and post them in one post for learning purpose. Watch the simple analysis, nothing complicated, just a few trend lines, support and resistance lines. I was bearish the pair not because of some news or fundamentals, but by just looking at the structure market. The post below is my thought process before the trade and during the trade. It shows how I have levels marked and how I expect price to react to those level. If price fail to react accordingly I stay out of the trade and reevaluate my analysis. I hope some people will find this lesson useful.

14 Jan

Price is at a very signficant level on this pair…a level where price might either keep pushing higher or bounce off. Looking at the weekly chart, the pair has been in a wedge for a very long time now and price is at the upper TL of the wedge, if price breaks through and follows through, the pair will move higher, but if price breaks through and fails to follow through, there is a lot of room for a move to the downside. For now its a wait and watch closely, because this level is very signficant. If we move down to the daily chart we can see how price is pressing on the upper TL of the wedge…could be a very good trendy trade from this pair in the next

Weekly Chart

aussie weekly

Daily Chart

aussie daily

18 Jan

aussie failed to follow through above the upper TL of the wedge…price is looking heavy now and we might see a drop in this pair…and there is plenty of room to drop…price could easily reach 1.0400

Daily Chart

aussie trade

18 Jan

Is she ready to go now, as we stated, a good entry could have been on the slight pullback. She might be saved by the bell (Friday), time will tell.

22 Jan

Aussie didnt do as we expected, we were expecting a drop towards the 1.0400 handle. Now the pair is back to the upper TL of the wedge, this is a very signficant level for this pair now, either the pair will breakout or bounce off. If the pair breaks out, just wait to see if it follows through after break, but if it fails to follow through, there is plenty of room to move back to that 1.0400 level. Keep a close eye on this pair now, because if she breaks out of this wedge, she has plenty room to move and could be a very good trend trade…aslo keep in mind that a failed breakout could be a very good trade as well.

22 Jan

A very interesting and signficant level on this pair is the 1.0560-1.550 zone, if the pair retraces to this zone, she will make a decision wether to continue moving up or drop. The level is the broken upper TL on the wedge and the broken pivot high. I am favouring the failed breakout on this one, time will tell.

240 minute chart

aussie 22-01

24 Jan

Aussie reacted to the zone as we expected, watch the false breakout of the upper TL and the pivot high. Also watch closely how price retested the pivot when it broke to the downside…a simple entry was on the retest, 1st target could be placed around 1.0510 and SL at breakeven. Price is more likely to bounce off to retest the upper TL of the wedge and then push back down towards the 1.0500 handle. Price has been to this level and now could probably break it for a move down. We have been talking bearish this pair since last Friday, lets see what happens.

Before

aussie 22-01

After

aussie 22-01 after

24 Jan

Now that the 1.0500 handle has been broken we expect price to retest the 1.0500s zone and she will make a decision wether to follow through or continue falling, if you were short from the 1.0550-1.0560 zone we discussed previously, you could have taken partial profits at 1.0510 and moved SL at breakeven. A retest of 1.0500 could be a good level to add to your trade.

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