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Forex Trading: Ideas You Can Trade - AUDUSD Downtrend Resumes After Bounce

Posted by Steven Hatzakis on Feb 10, 2014 7:29:00 AM

AUDUSD: Bearish Correction in Downtrend May Be Loosing Momentum

The daily candle chart below shows price history of the Australian Dollar (AUD) versus the United States Dollar (USD), known as the AUDUSD currency pair.

The pair is trading near .8929 and slightly lower today after trading higher in four of the last five forex trading sessions (including Sunday), and has reached the median line of a channel (within the two blue lines on chart) that calculates 4 types of regression over the last 350 currency trading days.

Failure to hold above this median line (the magenta colored line in the middle of the channel) could reverse the bounce over the last two weeks that enabled AUDUSD to recover from the low of .8658 on January 24, 2014 - which coincided on the 50% Fibonacci retracement line (yellow line on chart) that had been previously drawn in the last post about the pair in mid January.

If AUDUSD can break above the median line, a continuation is plotted with a dotted red line (on chart) and could provide a path with a target of .9059 to follow, whereas a reversal could follow down a line dotted in magenta (color of line) on the chart below. An additional chart provides a closer look (zoomed in) on the most recent price action, also on a daily candle chart for the AUDUSD.

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

Bullish Buy Entry Order

Create a "Buy Entry Stop" @ .9001 with a Limit to take profit @ .9048 and a stop-loss @ .8971 Risk/Reward Summary: Limit risk = +47 pips profit / (-30) Stop-loss risk = Gain to Loss ratio = 1.56 

Bearish Sell Entry Order

Create a "Sell Entry Stop" @ .8889 with a Limit to take profit @ .8852 and a stop-loss @ .9018 Risk/Reward Summary: Limit risk = +37 pips profit / (-29) Stop-loss risk = Gain to Loss Ratio = 1.27

Medium Term Chart with Daily Candles

Forex Trading Chart

Medium Term Daily Candles (Zoomed In):

Currency Trading Chart

 

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