Trade rationale: There’s a strong support level at 1.0200 and I think AUD/USD will bounce off from there. There’s a bullish divergence on the daily time frame too.
On the fundamental side, the speech by Bernanke hinted that the Fed isn’t looking to remove stimulus anytime soon so I think this could put the dollar back in selloff mode.
Entry: 1.0200
Stop: 1.0100
Target: 1.0600
Reward-to-risk: I plan to add to my trade every 100 pips for a 10:1 potential RR if it reaches my PT.
I’m new to posting about trading suggestions. Just out of curiosity thought I would do my own analysis and respond to your post.
Usually when I think I’ve spotted a breakout trade I try to rethink all the concepts/indications that would make it fail. By no means is this criticism, I just want to start analyzing some trades for documentation.
Broad Analysis
You mentioned there is a strong support level at 1.0200; I too found a support level around 1.01953 using the Fibonacci .236 at (Daily)(High 2/5/13) and (low 3/4/13). Since W.D. Gann said that through numerical trends, numbers often retrace to 50% their max derivative. It is reasonable to say there will be an uptrend if the .50% level holds true. This level was tested yesterday 3/4/2013 and remained true which is a good indication it will hold true again.
Drawing a Bullish GANN fan using the (8/4/12 High) and (5/26/12 low) can reveal some relief/caution.
Relief in the since that as long as the 8x1 angle holds, the trend will continue to be bullish. Since this angle has been tested before (3/4/13) the best entry point would be anywhere between 1.0100 to 1.0200 price levels.
Caution in the since that the 8x1 was tested and now it’s only a matter of time before it is tested again. Placing the test level around 1.01200 to 1.01000, any profits would require an automated/manual trailing stop to prevent loss below the 1.0200 level.
Your suggested target:
Noticing your target is a 100% retrace of 1/11/13, I tried to find the levels of struggle that you might have achieving your target. Drawing a Bearish Gann from (Approximately 1.0600) High(1/11/13) to the most recent low (3/3/13), I noticed the bearish 1x1 – 3x1 angles have been broken and deemed irrelevant. This leaves the 1.0600 theory with the 4x1 angle as strong resistance, projecting this date to be around mid April using Fibonacci time zones.
My suggested solution:
Using (1/11/13)’s High as a retrace, I believe it will be a long time and great risk. Switching target profit to the best fit Gann (High 2/05/13)and (Low 3/4/13 ) leaves the 1x2 angle unbroken and a strong resistance signal to count on. With a 100% retrace that leaves target profit at 1.0475 around the 3/21. With a 50% retrace of the current trend target profit would be 1.03 in the next 3 days. Now if the 1x2 angle holds true, the market can expect to be bearish once the 1.03 level is reached all the way back down to 1.0200 price level (Fibonacci .236).
I’m not an expert but I hope this helps with your trade. I might enter short at 1.028 and ride the 1x2 Gann angle down to the Fibonacci .236 level. I just thought I would send you my input.
