Hi traders, hope you're all having a good weekend.
We have a potential setup forming for AUD/USD on the 4H chart with a breakdown trade.
This could be an excellent shorting opportunity. I have tested a few hypothetical trading scenarios that could come into play when the FX market opens later. Each time, I have got over an 1:2 Risk to Reward.
When analyzing the pair, I discovered that price seems to react when it hits specific technical levels. Each time price hits the sideways resistance, it seems to test the resistance, and price stalls, and falls into the lows. I then zoomed out on my chart, and drew the line acting as sideways resistance further back. I was surprised to discover that the sideways resistance line I'd drawn had been having a strong affect on price for a very long time (Since May 2017).
With this information, I now knew that the sideways resistance line I'd discovered was more likely to be reliable, because it had been having an affect on price for a long time. I then discovered that price is currently at a horizontal support level as well, and is about to break the support level. If price breaks the horizontal support, coupled with the discovered sideways resistance, I believe these lines will act as a very strong resistance ceiling.
At the resistance line there is multiple reversal candlesticks showing weakness. And a clear Fibonacci retracement was hit. This further consolidates that we have hit a resistance level in play.
I am expecting a down move of 55-100 pips. If price is not affected by local support levels, it will achieve the full 100 pips. Only if a minor support affects price it will not achieve target.
Upon using a Stochastic indicator on this instrument, I discovered a strong hidden bearish divergence. I am personally not an indicator trader, but to those who do may find this information useful.
Do remember that price needs to open below the current price & support level, to be favorable to trade. So it is important to watch this trade carefully before considering a position.
I will be posting updates on this trade below as it progresses, so like & follow to keep at to date with this analysis.
If you have any questions or queries on this trade, feel free to connect.
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After posting of this chart, price opened nicely as predicted, and price made a move towards our target of 0.7505.
Upon reviewing again on the 4H chart, I noticed that around my predicted level of possible support around 0.7570-0.7580 (See above post for details) also coincided with the 50 moving average. This could also act as support.
Remember - That if price successfully breaks the support level, there is no other support systems which I believe will interrupt the down move.
Any breakdown below the support implies there is weakness in the trend, and will signal a continued move to the 1.132 Fibonacci extension target (See above chart for more details.)
We would ideally like to see the small upside correction completing as quickly as possible, whilst confirming that the support zone is now resistance. After this I expect to see a strong bearish move to target.
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Price was moving nicely when the market first opened, however after hitting a minor support level there was an aggressive reversal to the upside.
Upon reviewing again on the 4H chart, I have seen an aggressive upside reversal which stopped us out @0.7640. Price is still going to upside now. If price managed to stall before 0.7650 (The upper horizontal resistance line, see chart for details) then I will reanalyze this chart, and look for a new potential trading opportunity.
We have already been stopped out. So for now, no active trade.
Any trading below the upper horizontal resistance line (Below 0.7650) I do still consider an opportunity. So we will watch this trade whilst it remains within these levels until price says otherwise.
Due to the strength of the upside, I would like to see a compelling corrective candle at the upper band of the horizontal resistance. This would show that price hit the upper level, and the bears did not want to see price go higher and defeated the bulls at this imperative technical level.
If the above happens, I would feel assured that the bears have acknowledged the same level I have in the above chart, and been aggressive to stop it rallying further.
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Price has had a significant breakdown on the 4H chart. There is a large bearish candle that is hard to ignore.
As price never exceeded the higher tier of the resistance zone, so I am now happy to put this pair back in my watch list.
I am confident there will be a set up on this pair soon. Maybe this analysis will work out for us after all.
Giao dịch đang hoạt động
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Price successfully broke the resistance zone convincingly, after a large bearish engulfing signal.
The signal was extremely strong as seen on the 8H chart (See chart below).
I am now expecting this pair to continue the breakdown we can now see on the chart.
It could have an upside retest of some kind before achieving the low target of 0.7510.
I will update this analysis as the trade progresses. But for now, it looks like a good trade opportunity for sure.
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Price has clearly made up it's mind on trend direction and now is breaking down as predicted.
With Dollar now trending, it appears that AUD/USD was finally able to find stable ground and pursue it's intended trend.
There is some structure at 0.7560 0.7530 that could interrupt price from hitting our target at 0.7510 (See details on the chart)
Thank you Tom! Oz may have some squeezing before the possible hike from RBA on 5th. Dec and of cause during the hike on 13th. Dec from FRB. RBA's Lowe has talked about hiking already but also he's talked about more patience. From British commonwealth consideration, the Lonnie, the Sterling, then what's the next? Not the India, apparently.
TomProTrader
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@victor.Y.F, Totally agree! My thinking exactly. Thanks for your input. :)
Victor.Y.F
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@TomProTrader, the US dollar may bounce off of here now to an equal leg. It may take 2 months till the end of January or longer. Commodities market and stocks market are both squeezing, it looks like the first huge hike in 2015. Oz should hike before the US dollar or the fall will be abysmal. I’m still expecting the hike (5th. Dec.) to lift it up a little bit then the US dollar hike makes it correct with the monthly trend no breaking.
Chandi49
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Would you be able to indicate some levels for this upside correction please ?
Also you have said breaking the support level will interrupt the downtrend move. I believe what you mean is if it breaks the support downwards it should send an even better bearish signal with no support and moving towards 1.132 fibonacci extension level. Am i correct to say this ?
Would like to know levels from your end - believe you went short as it opened @ .7613 which is quite close now as its trading at .7607 currently.
In addition, will you take some profits at .7580 levels ?
TomProTrader
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@Chandi49, The only upside correction level that concerns me is 0.7570's and above. Below this price, I am happy to see price go to downside.
No, I actually said "there is no other support systems which I believe will interrupt the down move". Which is what you have said above. So yes, you are correct.
Yes, I shorted upon opening on the FX market at around that level. I will hold the trade for the time being, and see how the candlesticks set up over the next few hours before determining what to do.
I highly doubt I will take profits at 0.7580's. At best, I would move my stop loss to break even when we hit that support level. This will bullet-proof my trade, and put me in a high probability trading position with absolutely no risk.
Chandi49
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@TomProTrader, Thank you for your prompt response. Great stuff!
So basically you are going to move ur stop loss to .7613 again so your trade is bullet proof. So do you feel if it comes to that level it will only move up ?
Also you had said ''the only upside correction level that concerns you is 0.7570 and above'' So what you mean is getting below that level and correcting price upwards will only be your concern.
Is there a possibility of chatting to you on instagram or on whatsapp feel we can get a dialogue going if you are keen. I did send a message to you on instagram as to what platform you use to trade ?
TomProTrader
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@Chandi49, I will leave my stop loss at around 0.7640. When price goes to, or just below 0.7580 I will consider moving it down, to make the trade bullet proof and risk free.
Yes, the only concern I have is the 0.7570-0.7580 support zone. If it gets below this I have no concerns at all. The trade will be at risk until it goes below the support zone.
You may add me on my Telegram, where I frequent. Add me on my Telegram: @TomProTrader