AUD/USD in a correction channel approaching a level of distribution.
There is every chance that the gold price will rise and meet the AUD/USD median, but there are many signs here suggesting the AUD sell down to meet with the gold fall.
- 1 Hour – Price sitting at the 200 EMA
- 1 Hour – Looking for candle reversal signals
- 15 minute – RSI possible divergence
- No surprise the AUD has followed the gold price, and now providing an opportunity to close the spread.
- 15 Minute – Following channel into distribution – Look for channel break or strong candle stick bearish reversal.
Support – 50 EMA, 200 EMA, 0.72620, 0.72480
Resistance – 0.72785. 0.72875
Optimal entry provides the greatest reward to risk ratio while supporting entry is a zone for reversal signals.
Optimal Entry – 0.72825
Supporting Entry – 0.72785
Candle Reversals for entry
- Bearish Engulfing
- Bearish Dark Cloud Cover
- Bearish Shooting Star
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.
IF: Price breaks below 0.72900– 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:
Optimal Entry 0.72825 – Target 1 0.72480= 4.5x Reward to Risk
Supporting Entry 0.72785– Target 1 0.72480= 2.5x Reward to Risk