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Forex: Ideas You Can Trade- AUDUSD Nearing Retest of .8850 Support

Posted by Steven Hatzakis on Jan 15, 2014 6:29:00 PM

AUDUSD: Swift Bearish Momentum Resumes as Pair Moves Back Under .9000 Today

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 .8902 as of publication, after reaching a low of .8886 today.

Last time the pair was covered in this series, .8850 was noted as an imment support level and subsequently had nearly been reached before support was found. The bearish price action that has resumed in the last two sessions could push the pair to test this level again or push below it. 

If the pair moves lower and finds support, as its has in recent weeks near previous lows around .8850, when taken together these could act for a longer term perspective reversal. However, as such support may be re-challenged, new lows could be reached in 2014 if this level is breached to the downside. 

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

1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ .8952 with a Limit to take profit @ .8980 and a stop-loss @ .8932 Risk/Reward Summary: Limit risk = +28 pips profit / (-20) Stop-loss risk = Gain to Loss ratio = 1.40 

2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ .8881 with a Limit to take profit @ .8849 and a stop-loss @ .8902 Risk/Reward Summary: Limit risk = +32 pips profit / (-21) Stop-loss risk = Gain to Loss Ratio = 1.52

Medium Term Chart with Daily Candles:

audusddaily jan 15 2014 note

 

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