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Forex: Ideas You Can Trade - AUDUSD is Exiting Triangle Pattern

Posted by Steven Hatzakis on May 19, 2014 8:11:00 AM

AUDUSD: Triangle Created from Intersecting Bearish Resistance and Bullish Support 

Each of the three daily candle charts below show the price history of the Australian Dollar (AUD) versus the United States Dollar (USD), known as the AUDUSD currency pair, and trading near .9359 around time of publication today.

After the bearish momentum at the start of 2014 reversed at the year-to-date (YTD) low so far of .8658 reached in January, since then a bullish support line has emerged to carry the AUDUSD higher and regain a longer term bullish support line, as discussed in the last post about AUDUSD in this series.

A push higher above that long term bullish line encountered resistance and caused the pair to subsequently fall back below the long term bullish support line only to recover again on the short term bullish support that has enabled the above mentioned recovery from January.

Now AUDUSD is at a crossroad, with the shorter-term bullish support line and bearish resistance line intersecting.

Therefore, if an upside breakout of that triangle formation occurs one possibility is where the long term bullish support line could be regained, or if a breach to the downside of the shorter term support line happens, then the pair could head back towards 91.00 in the near term. 

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

1. Bullish Buy Entry Order: Create a "Buy Entry Stop" @.9401 with a Limit to take profit @.9451 and a stop-loss @.9371 Risk/Reward Summary: Limit risk = +50 pips profit / (-30) Stop-loss risk = Gain to Loss ratio = 1.66

2. Bearish Sell Entry Order: Create a "Sell Entry Stop" @ .9324 with a Limit to take profit @ .9300 and a stop-loss @ .9347 Risk/Reward Summary: Limit risk = +24 pips profit / (-23) Stop-loss risk = Gain to Loss Ratio = 1.04

Medium Term Chart with Daily Candles:

audusddaily may 19 2014 note zoomed

Medium Term Daily Candle Chart Unzoomed:

describe the image

 

Medium Term Daily Candle Chart Different Look:

audusddaily may 19 2014 note

 

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