Is your strategy trend based?
Or are you a reversal trader?
Either way the AUDUSD market will be of interest to you.
The strength and weakness analysis highlights the Australian Dollars extreme strength, especially against the USD.
But is this trend going to end?
Watch the video to find out more…
Hi, and welcome to this Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.
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In this video, we’re going to take a look at AUD/USD as we’re looking for the potential for this price to move a little bit lower.
Now, you know we look at the strength and weakness analysis here and if I bring up the strength from the weakness chart, what it highlights is the fact that we’re at an extreme.
So, when the market comes into this plus five area, it means one or two things. It means that the market is very strong, or the AUD is strong. But it’s coming to a point where it’s stronger than a lot of major currencies and that we could see a reversal. So, whenever I see anything in plus five are on a strength and weakness meter, I’m looking for that market to basically run out of steam and look for the trend to run out of steam.
Yesterday on AUD/USD, we had this candlestick form, a really nice bearish engulfing candle with an advanced close. What I mean by advanced close is that we close below the previous candlestick low. So, there is a high probability that the market will push a little bit lower. So, what we did was we set a limit order at a key area of the structure, and stop-loss is above the highest because I was expecting the market to retest that structure drop to the downside. It gives us a nice risk-reward ratio on a daily timeframe. Now, what happened since the market has tried to creep up towards our entry, it missed by just a few pips and has started to come back down. But, the fact still remains the same – I still want to be a short seller or looking for reversals in this market. We can see that the market has a little bit of support down at targets. So, this 0.7320 area was the area of a target. That was the area of the target because it was the previous daily structure highs. So when I’m looking at this, I’m looking for targets. I want to see the market pullback and get us in.
The four-hour timeframe is starting to form a lower low but what we really want to see is two consecutive lower lows.
Now, what we have is the market making an uptrend, through here. We then break through one-two lows, we’ve pulled back up into this structure area, which is where we’re targeting for some shorts, and then we started to break back down a little bit. So what I really want to know now is, can we take out these lows? Maybe if we do take out those lows, we can get into that key level, rally, try it again, and we could look for some short-term short opportunities at this point. If it breaks, we can look for the continuation. If it bounces, then again, we can look for the trend to reverse, or the price could still head up towards this resistance level that we have pointed out here.
But the important thing is to note is that the strength and weakness table is suggesting that we look for the AU Dollar to weaken. We’re starting to see that weakness creeping out, especially with the price action that’s occurring at these key resistance levels. If we look left, you can see a huge resistance level, just through here.
So, we’re looking for that market to start declining. If we do get a decent breakdown, we’ll look for some further shorting opportunities. But for now, we’re looking for the market to pullback and look for a short-term short into that 0.7320.
Thanks for watching this video update and I’ll catch you soon.
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