AUD/USD trends down
Hi trend and day traders and fans of financial markets. Today I want to talk a bit about aud/usd recent reversal. I will be using the same chart that I posted maybe a week ago talking about bullish possibilities in the pair. Today I want to show you a technical structure that indicated a reversal that we had today. AUD/USD has been in an upward swing for about a week and the possibilities in trading the security were simply buying on dips.
Price action at resistance is very important
However, an experienced trader must have noticed an upcoming barrier which was a resistance level of 1.0530. It is very important level as it is used to be support once (you can see it on bigger time frames) and now should act as resistance. The pair was able to break through the level somewhat and it might have fooled some traders into buying a breakout. However, I do not think it is a good idea to buy a breakout after a security has been going upwards for a week. We need to see some consolidation at the area and only then make decisions.
How one could have traded the situation
So, after breaking the level, the pair formed a reversal pattern (123 pattern) and during the Asian session it went through its’ most recent support, which used to be resistance and collapsed more than one hundred and fifty pips. One could have traded the situation by simply placing a sell order below 1.0520 level (previous support now resistance) and when the order was opened one simply to go with the market and exit the market at another support level or an even number or leave the position open if one expects the market trend will continue. That is the way one could have used the collapse in aud/usd today. Hope the trend analysis was useful.
See also:
Disclaimer
Trading financial markets carries a high level of risk, and may not be suitable for all investors. All information on the blog is of educational nature and cannot be considered as advice, recommendation or signals to trade in any financial markets.