Coming up!!!
Now - on the daily chart - my first instinct is to close the position and take profit NOW - going against everything I said in my opener! My logic of course being that NOTHING that drops this far this fast is going to continue going down! I don't know! I mean - at this point - this one lot that cost $1000 - is currently in a profit of $2470 (different broker and it's the only position I have here)! It's tempting! On the other hand - I'm now sure that on the Weekly Chart the first Parabolic SAR dot is going to appear at the top - hopefully meaning that there is a long term down trend about to start.
AUDUSD is probably a bad example though - because its movement is largely dependant on the Gold price - so - if you can predict the Gold price - you know how to handle the rest of this trade going forward (my guess is that Gold is going to continue falling purely based on the fact that when China raised its interest rates last time Gold started its downward tumble - and they raised interest rates again last Friday. I don't know why the so called 'Gold Gurus' miss this every single time - you cannot believe how much literature I receive telling people - once again - that Gold is NOW THIS TIME DEFINITELY going to $700 - that's what they said last time - except - this time - I'm clever enough to watch the charts and not listen to the 'experts'). Of course - on the other hand - the way stocks are moving - who knows!
At the risk of contradicting myself I have also thought about using Bill Williams' Accelerator Oscillator to know when to get out of the position. This normally changes color before the whole of the reversal required for Parabolic SAR to indicate such reversal has completed i.e. early warning. I suppose - if you're wrong - you could alway re-enter the position with a very small stop.
Regards,
Dale.
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