Trading Forex – AUD/USD Further downside

Posted on 27. Jun, 2011 by in Forex Signals, How To, Random Noise

Trading Forex is all about planning your trade and trade your plan. Read todays outlook on Cable in order to have an idea of the possible moves in the market.

In general we are clearly seeing $ strength across the board, and as you can read in my post about EUR/USD and Cable this week, I expect to see further downside, and the same holds true for AUD/USD. The pair currently trades around the 1.0420 level and if we get some kind of pullback I think a short trade should be a no-brainer.

Trading Forex – Bias

This bias on AUD/USD is mostly based on general dollar strength and a technical setup compared to that of AUD weakness. Read my post on EUR/USD and Cable to get an idea of my bias on the dollar (recent comment on QE3). In addition to this there is somewhat of a setup showing possible short term downside for XAU, which fits this setup just fine, correlation wise.

Trading Forex – Technical Setup

Click the picture below to see a the daily chart of AUD/USD. We clearly broke the 1.0500 level which clearly was a key level of support.

Additionally we broke the lower trendline which indicates possible further downside. For now, there is not a whole lot of support holding us back and a drop down to the 1.0170 definitely seems possible. Hence, if we can get a tiny bit of pullback we could be setting up for a very favorable risk:reward setup.

Trading Forex – Ideas

With the above mentioned aspects in mind, I am currently only looking for short this pair.

I would prefer to wait for a pullback to the 1.0500 level and then take a short trade. If we can get in around the 1.0500 level, a stop loss of some 130 pips would place us above the upper trendline and with a profit target of just around the 1.0170 level, we are in for one beautiful risk:reward setup.

Related posts:

  1. Trading Forex – EUR/USD More Downside?
  2. Trading Forex – EUR/USD Ready for Further Downside
  3. Trading Forex – Cable Up for Further Downside
  4. Trading Forex – Perfect Trade but Still in Range
  5. Trading Forex – Currently Long on EUR/USD

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