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Forex: Ideas You Can Trade- AUDUSD Multi-Year Lows Continue

Posted by Steven Hatzakis on Dec 19, 2013 6:45:00 AM

AUDUSD:  Increased Bearish Pressure Pushes Aussie-Dollar Into Dive, Can be Averted

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 .8845 as of publication.

Today the pair reached below the low of .8846 from August 5, 2013 again for the second day today near .8821, after .8819 was reached yesterday. The low of today and yesterday have not been reached since late August of 2010 or over three years ago.

This indicates that the pair is trying to hold on to avert a steep drop.Such a steep drop if it were to occur would likely be along the current bearish channel (point 3 in yellow on chart)

The last time the pair was directly covered in the Ideas You Can Trade series, the long term bullish support line (point 4 in dark green) had been briefly regained before diving back down its current trajectory. Following that article, AUDUSD was indirectly covered in this series with an updated chart when the AUDCAD cross pair calculation was detailed

A further daily candle chart is provided below which covers a more medium term outlook of the pairs history and emphasizes the current support under tremendous pressure against the overall bearish momentum. Will this be enough to reverse the trend? Due to the bearish short term outlook, buyers may need to wait for a large price recovery before having confidence to go long again.

Accordingly, selling pressure should build considerably if the lows of today and yesterday are breached.  

Below are examples of how to trade a bullish continuation or a bearish reversal:

1.  BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ .9101 with a Limit to take profit @ .9161 and a stop-loss @ .9068 Risk/Reward Summary: Limit risk = +60 pips profit / (-33 ) Stop-loss risk = Gain to Loss ratio = 1.81 

2.  BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ .8796 with a Limit to take profit @ .8759 and a stop-loss @ .8822 Risk/Reward Summary: Limit risk = +37 pips profit / (-26 ) Stop-loss risk = Gain to Loss Ratio =  1.42

 

Short term daily candle chart:

audusddaily december 19 zoom note 2013

 

Medium term daily candle chart:

audusddaily december 19 2013 note

 

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