AUD/USD... - Page 23

FWIW....

This pair held overnite and hasn't budged out of its 70 pip range...but both the AUD/USD and AUD/JPY are worth watching..

The indicators suggest a breakout move on this pair (either to correct or continue) is looming in the near future and should be a significantly strong move.. May wanna keep it on radar...


-w

Bet they meant shiFt...



-w

FWIW this pair and the AUD/JPY have been stuck in a narrow range for a while now. As mentioned its on my radar to watch--think its ripening to move soon.

Trading How-To Tip: I'm considering a box breakout type of trade here...to catch whichever way it goes..though I'm thinking it may try to the short side. For those unfamiliar with a box breakout type of trade--its a pretty simple and easy trading way to catch a breakout move when a pair gets stuck in a range. I will give a brief explanation--you should mark up a chart if you are interested in trying or learning this method. I use 1hr charts for all my trading--so I would suggest you use that time range. Here is how I do it....

First find a pair that is stuck in a small range for a couple of days--you want a pair where indicators are pretty well flatlined too in the middle. If the indicators are flatlined in the lower or upper areas--that is a different trade method... This is the basic version for a balanced pair--and the AUD/USD right now is balanced with the MACD sitting right on the histogram line on the 1hr chart...

Next you need to define the price "box" which is the upper resistance and lower support range for the pair that it has been bouncing in. Draw this as parallel lines. Look to where the range began to where it is now and box it in on your chart. Next you will want to set a trigger area outside that box with another line...outside the current range a pair has been stuck in based on last known S&R.. Again note--this type of trade typically only works well when a pair is in a 50-80 pip range IMO. The tighter the range towards 40-50 pips in price range--the better the trade can be on a breakout move...the wider it gets towards 70-80 pips in range--then the bare minimum this could move on a breakout. I know some traders who set a limit at 100 pips to define a 'range'--but to me that is too wide on most pairs and can lead to more false moves, swings or lackluster breakouts that take longer to work...

Anyhoo...Once you have your 'box' and you found the boundary area outside the 'box'...you then set a limit entry long and short to trigger on a move just outside your box. Look at previous or longer term charts for your firm S&R..if you find a doji or other area close by in that area--that is significant to note. Otherwise look for a bounce area or a consolidation area where the pair held for 4-8 1hr candles to find that S&R. To avoid 'noise' or false breaks--you usually set your entry well outside the box...usually by about 15-20 pips or so outside or the next S&R area--the best set up is when the next S&R range is at or close to that 15-20 pip outside area. Look for a nice round number to enter on..no odds like 3's or 7s..round to 0's and 5's. Then set your limit orders and wait for a catalyst like news or exhaustion to push the pair outside the box to a new level.

Typically for STOPS---place your stop in the middle of the range of the pair to minimize loss on a reversal about 10 pips under your target goal or at a significant S&R area.

These types of plays should be good for about 50-80 pips on a breakout move...again the narrower the range the more move you could see in a breakout--the wider the range the smaller the move on a breakout possible. These are just general 'rules' I use for safe trading... Remember--never try to double your account on one trade--you want consistant wins and to play safe and smart--not greedy and stupid...



I would encourage folks to try this type of trading if you are not familiar with it by first paper or demo trade this--to get a feel for it. Its a very simple method which you can build off of--but its an easy one that doesn't need validation levels or anything special. Don't risk anything you cannot afford to lose--which is why I suggest folks paper trade it if this is a new idea to you.. Like any trade method it is not 100% certain....but I have found this type of method usually has a good track record in the long run of things... If you choose to paper or demo trade--hope you will have fun trying it out and hopefully we'll have a winner trade here in the next day or so...


Anyway--hope that little tutorial helps anyone interested...

-w

To give folks an actual example on these pairs, here is what to look at on the AUD/USD pair and the actual levels I am setting on my trades:

Current Range on the AUD/USD is bouncing roughly between .8705 - .8780 and that is just within the boundaries of what I would consider for a box breakout trade. That price range is my 'box".. Now what I want to do is find the next round number level of Support and Resistance outside that box to set as trade entry areas. I note these areas as .8800 entry on the long, and about .8685 on the short. Note those are 15-20 pips outside the box AND the concur with last known or recent support and resistance lines on my 1hr charts. You may have to look back a month or two or even longer if the price is at new levels to find a S&R area. Try not to go more then 25-30 pips outside a box or its just not gonna work out..riskier you can go less but really you increase the risk then for getting caught by a false move.

Next I want to set exit targets for both trades--since this is a wide range, I want to look for about 45-55 pips away--and to my liking there is a next S&R area just at those levels worth noting.. Exit for the long would be at .8855 and the short would exit at around 8630.

Stops for this would be in the .8715/20 area for the short and .8760/70 area for the long. Place both limit orders with stops and exits--and wait and see what happens. The R:R on this type of trade usually is a simple 1:1 - 1:1.2 and depending on your spread usually works out well worth it..

Once either trade triggers--leave it alone... Let it run its course--it will either hit the target or it will stop out--but the KEY is to have patience and let it alone to run its course...TRUST that the trade will either hit its mark, or will safely stop out for a minimum loss. Oh--and if one trade triggers--dont' rush to cancel out the other--sometimes swings & reversals happen and one losing trade can then swing opposite with full force and trigger a winning trade which washes out your loss. The odds of one trade losing is even as any trade...but odds for both trades losing is slim.. There is a 'double' type of trade which means at first it doesn't succeed--try it again...but thats harder to call and learn to see IMO..


Take a 1hr chart--draw it out as outlined above--see what it says to you..




-w

Here is where I am now...

Pair triggered my short but then swung back into the range for a stop out loss--it happens but my loss is minimized. However this now touches on a repeat trade I touched briefly on in the initial post...which is just cause the trade didn't work this time, does not discount the idea of a short still occurring.. That is just a timing issue which can occur in range bound pairs, and shows a lesson here in that just because a trade does not work out the first time does not mean its necessarily a bad idea..this comes to where traders have to learn to trust their judgment and plans if they believe they are still good ideas. You can have a sound good trade idea that technically or based from your experience in similar trades 'should work'--but the market may not yet be 'ready' to go all the way. If you have ever seen a trade idea trigger and then swing back to tag you out only to later return and follow thru as you planned or thought it would--this is the type of market move I am referring to...and it occurs frequently many times when dealing with Range stuck pairs. I have run into this type of situation many times where the trade is sound but the timing is off...so persistence to an idea can still work out.

So, given that--I have re-entered the short limit order to trigger again should it try to go south again.. Indicators are still on the fence--so again it could go either way for a breakout move--if they were not still on the fence I would probably consider differently as conditions would be changed--but they are still in mid ground to go either way so for me--the idea is still a high probability to occur. Time will tell--see what happens... It could bite again or swing reverse and tag my long and do the same thing or go to exit--but my stops are there to minimize losses either way...and the fact is that eventually it has to get out of this range and when it does I plan on trading the move...



-w

Ok sports fans for whomever is playing along...here's where the trade on this is at...

The short trade lost out overnight but now the LONG trade out of the box triggered just a couple hours ago--and currently is about 30+ pips in profit right now...everything moving along toward the target. Hopefully it shall get there it seems to have a good amount behind it ahead of the overseas sessions opening in a couple hours. Given the positive move so far, a good idea is to move the stop up from a -40 pip stop at .8760/70 area, up to about .9790--about a -10 pip stoploss...and hold on to see if she makes the exit target at .8855. This way any further loss will be minimized should it fall back..but the current .8800 level when broken proved in the past couple hours to be a good firm support range with not much faultering below it...so moving my stop up to minimize any further losses on this pair seems the wise move..

Hope this is helpful to folks following along...



-w

the .9180 level is a historic tough nut to crack level on this pair and get beyond--but its been trending up lately and is very exhausted and over-extended itself prematurely--not even a crappy US NFP report can push it higher... May see some hovering continue til a break...





-w

Each pair is different and its hard to understand--FX is very tough to get a grip on sometimes.....which is why I suggest when trading currencies, beginners should get to know ONE pair--focus only one that one pair for months--and learn it inside and out cause it will be different from another...and after a few months of 'understanding' that currency and its influences and how it changes and shifts around--then you can move to another to trade. But thats just my view on how to learn FX trading.. But just remember--each pair is different and reacts differently.. Each pair has its primary and secondary influences and reacts differently at different times and its moves will vary on its condition or status at the time for how wide or how small it will swing. They rarely to never all react the same depending only on what the counter-currency is..and it changes thruout time as the order of priority influence rotates around.

This is just based on my research and opinion...but the currencies all react IMO to what I view as the same 'Big 3' influences...and at any one time one of these will be primary influence to that currency--1-central banking/economics for their country, 2-commodity and world market values, or 3-government relation or other currency dependency / interdependency values. All that changes for each pair is the order which is the primary influence in that pair is or with what the counter currency is. Trick is to learn or see what the influence at the time is--and see when or what causes it to shift to another priority...

So--some react heavily on economic and central banking terms heavily(like the EUR and GBP and CHF)--and others react on commodities(AUD & CAD)...and some based on their co-dependency or interdependency on another currency for its value (i.e. Yen). But just cause the USD is paired to one currency does not always mean that when news occurs that across the board the currency will move the same..its always a comparative study and its relevant to that time period... AND that order of priority will change as parts of economic news changes the balance of things..

This is just my view and opinion, but the Commodity pairs--AUD for gold and the CAD for Oil--they will move differently from the EUR or the GBP or CHF...and I find the YEN to be its own animals. The USD in all this is a world-wide base for how others compare to the strength or implied strength of the USD. In a currency pair you have a currency with one influence--pairs with a currency of another influence--and the fluctuations can switch gears in mid shift quite often. NEWs and other catalysts can and do one of two things--either force brief moves/pauses and (with enough repeat data) force new direction/change...OR...it can re-order the 'big-3 priority list' for the currency to base itself off from for its value at the time. A currency will take its strongest influence at all times to find its value--but that does not mean when the Big 3 shift around that the currency may then be over-valued by comparison to a weaker influence. I think of it like a JENGA game--it gets built up and up--things get shuffled around--and sooner or later you have added or pulled out one block too many in the order and the thing tumbles and is reset (or breaks/changes a trend). How far the 'mess' spreads when it comes crashing down depends on how many bricks had been moved prior to the fall to minimize the mess...


JMO...


-w