AUDUSD downward trend continues which could offer us a short trade idea as price approaches a major demand zone.
Watch the video to learn more…
AUDUSD remains in a downward trend offering us short opportunities. In today’s video we have outlined a short trade idea which we can break down using top down analysis. Firstly the daily chart shows us that the price recently found demand around 0.7100. Strong buying momentum came from this area previously which is why price may head back to this area. If the daily trend is going to see prices continue to this demand zone we should see the 4hr time frame form lower highs and lower lows.
The 4hr Chart
Looking at the 4hr chart we have highlighted what happens when the price is in an impulse phase in a downward direction. The 4hr forms lower highs and lower lows and often uses the previous structure lows as resistance to continue the trend. If the price rallies and retests these lows and forms bearish price action we can look for short opportunities on this time frame or on a lower time frame.
The trading chart for this pair could be the hourly as we can use a trend based strategy to enter the market. We can apply a 50 exponential moving average to the chart to help us consistently execute in a trending market. If the price retests the 4hr resistance and the 1hr 50 ema with the price closing below the moving average we can look to enter short positions targeting the demand zone below.
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