AUD/USD Daily chart forming a flag consolidation at the trend line indicating possible short-term fall.

AUD/USD

Scenario 1: Consolidation touched both 50 and 61.8% of Fibonacci which was respected and fell. Now we can look at the continuation fall from current price for the AUD/USD to break September lows.

 Scenario 2: IF bounces and finds strength to the upside, we can expect the AUD/USD to rise into the 78.6% Fibonacci at 0.73675 coinciding with September open price.

AUD/USD

Key Points:

  • Price reclaims and holds below the 200 EMA
  • Price holding below the 50 EMA
  • 50% and 61.8% of Fibonacci touched and respected (September high – September low range)
  • Daily – Flag pattern for break out
  • RSI could break trend and range simultaneously for momentum
  • Scenario 1: Must watch around 50 EMA and 0.73050 for bearish candlestick signals or rejection

Key Levels:

Support – 200 EMA, 0.72500, 0.72000

Resistance – 50 EMA, 0.73050, 0.73300, 0.73675

Entry Zone:

Optimal entry provides the greatest reward to risk ratio while supporting entry is a zone for reversal signals.

Optimal Entry – 0.73050

Supporting Entry – 0.72990

Candle Reversals for entry

  • Bearish Shooting Star
  • Bearish Engulfing
  • Bearish Dark Cloud CoverBearish Candlesticks

 

The Risk:

As traders, it is your job to mitigate the risk and only trade structures that provide high probability and great reward to risk ratios.

If you are not comfortable with defined exit levels, experiment with Moving Averages to help set solid exit rules to protect your capital.

Scenario 1 IF: Price breaks above 0.73300 level – this would suggest the structure is not in our favour and would be wise to reduce exposure or close the trade until a solid signal gives us reasons to re-enter.

Scenario 2 IF: Price breaks above 0.73800 level – this would suggest the structure is not in our favour and would be wise to reduce exposure or close the trade until a solid signal gives us reasons to re-enter.

Reward / Reward Targets:

Scenario 1

Optimal Entry 0.73050 – Target 1 0.72500 = 3x Reward to Risk

Optimal Entry 0.73050 – Target 2 0.72000 = 5.5x Reward to Risk

Supporting Entry 0.72990– Target 1 0.72500 = 1.5x Reward to Risk

Supporting Entry 0.72990 – Target 2 0.72000 = 3.2x Reward to Risk

Scenario 2

Optimal Entry 0.73675– Target 1 0.72500 = 5x Reward to Risk

Optimal Entry 0.73675– Target 2 0.72000 = 6.7x Reward to Risk