AUDUSD Swing Trade – April 2/3
|April 2, 2014||Posted by Cory Mitchell, CMT under Forex|
Eyeballing an AUDUSD swing trade on the evening of April 2 (for most of you it is already April 3).
The main premise for the trade is the strong run higher seen at the end of March. This was followed by sideways movement over the last several trading sessions. This is has created a flag like structure on the daily chart, with the expectation for another move higher.
Buy area between 0.9240 and 0.9210.
Stop area below 0.92 (mine is currently at 0.9193, but that is likely more room than is required). It will be moved up to lock in profit if the price advances higher.
Target between 0.9375 and 0.9415 (mine is currently at 0.9392). There is another target at 0.9475, but that is a bit too greedy for my liking on this particular trade. If it goes there, there will be other opportunities to get back in.
I always encourage traders to never risk more than 1% of their trading account on a trade.
Trade updates will be provided in the comments section.
AUDUSD Hourly Chart: Blue dashed line marks entry, with yellow dashed lines marking current stop and target.
Once the price moves above the short-term downtrend line and above 0.9260 the trade should be in good shape. Until then, the risk of another break lower remains high. Some traders may prefer to wait and go long on a break of the short-term trendline, or when the price breaks this entire structure and significantly clears 0.93.
Pitfalls of the trade
The trade is going against short-term downside momentum.
Why I like it
One of the main reasons I like the trade is because it is high reward for the risk (about 5:1).
We have been moving in a channel for the last few days, and today the price broke below the channel bottom, but quickly failed and bounced back inside the channel.
The longer-term trend is up, since the start of the year.
The forex trades I make are placed with my My Favorite Forex Broker.
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Cory Mitchell, CMT
Trading involves significant risk of loss. Trade within your limit and view the risk disclaimer, if you are unaware of the risks.