AUDUSD: Long Term Bullish Support Line Regained thanks to Support Just Below It
The daily candle chart below shows price history of the Australian Dollar (AUD) versus the United States Dollar (USD) over the medium term. This pair is know by the symbol AUDUSD and is currently trading near .9141 as of publication after regaining the long term support line (point 4 in green on chart) in the last few sessions.
Last week we covered the AUDUSD pair in the Ideas You Can Trade series when the long term line (point 4) had been breached and where the three intersecting support lines just below it had acted as a safety net and had since propelled the pair back up up a very short term bullish line (point 5 in aqua) to regain the current the long term line (point 4) again.
While the pair could still face bearish momentum, for now the the support building back on the long term line (point 4) has returned indicating that the prior breach may have just been a false-breakout. Accordingly, a break below this line again would be very bearish, whereas continued bullish momentum could indicate a real reversal has taken place or a delayed bounce that could be short lived.
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ .9165 with a Limit to take profit @ .9199 and a stop-loss @ .9035 Risk/Reward Summary: Limit risk = +34 pips profit / (-30) Stop-loss risk = Gain to Loss ratio = 1.13
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ .9059 with a Limit to take profit @ .9005 and a stop-loss @ .9090 Risk/Reward Summary: Limit risk = +54 pips profit / (-31) Stop-loss risk = Gain to Loss Ratio = 1.74
Medium term daily candle chart: