The speech that Guy Debelle indicated is the Australian economy will continue to have weaker economic growth. (high impact)
Fed Harker speech might suggest that future interest rate hikes might come shortly.
Tomorrow events are AUS NAB business confidence and Chinese retail sales. (after the speech that Guy Debelle did, if business confidence is lower than previous, then AUD/USD will be heading in a bearish way).
a. USD economic data is at 9 to 10 pm AUS time, this news won’t make a dramatic move on the AUS but should be considered.
The impact on the previous Guy Debelle speech will have a significant impact on the following economic data if they are lower than expected; the AUS/USD will be heading bearish and will give me a high probability trade.
dailyfx– bearish and fxstreet – bearish.
As the event already happen, I should close my trade before 10:30 am Australian time.
The past candlesticks have been bearish because of the speech and trader’s think so as well.
At the moment at 1:35 AM, the price is consolidating at 0.76385.
My opinion about what traders expect the market to be heading, I will say a downtrend as Guy Debelle indicated weak economic growth and most trader’s probably won’t expect strong business confidence.
At the moment bulls and bears are consolidating and questioning where price will go.
Use technical analysis to further my research
a. I’ll use RSI + MACD since the market could be trending downwards.
. Also use ADX to determine strength.
Question whether price will increase due to an overreaction of the market or will it go further because of Guy Debelle Speech?
a. I’d say because of the speech, price will bounce up and then go back go back to consolidate.
b. Hence, I will put a higher than normal market entry level at 0.76450 with an expectation that price will bounce to lower levels, my stop loss will be at 0.76487. With the given information and the research I have conducted, I assume the trend will continue downwards. I made sure that I stick to a safe zone, since prices are consolidating and I am not sure where price is going, the probability of me being correct is 65% correct. Hence why I put a higher than normal market entry point of 7 pips, to prevent unusual and unpredictable movement. Experimenting an idea.
I made the correct judgement that market sentiment, trader’s view and the speech will result in a bearish outcome. But because of my uncertainty and greediness of maximum profit and played it safe attitude, I lost a chance to enter a trade that went downtrend dramatically, I am distraught with myself. However, I did make an excellent analysis in the end which I should be proud of. I also did not put a take profit and would have gained tremendously from the price movement.
Potential improvements I can make read candlestick formations more profoundly and when a trend is occurring what strategy to employ not to miss pip gaining potential.
Compounding the information I gathered, NAB business confidence remains the same, proving Guy Debelle’s speech might be irrelevant in the short-term. I will withhold myself from trading before 1 PM and watch what happens as I believe China’s news will heavily affect AUD/USD. China’s news expected to be better than expected. It’ll be consolidating beforehand.
Before the news came out for China, there was an optimistic view that they will meet expectations. From my perspective, the market already priced in what they believed and hence for the price to gradually increased shown in the graph. As I concluded, price consolidates till economic data comes out, and, therefore I will need to learn about other currencies if I want to further my Forex career because volatility equal opportunities for a trader, however, since I am a beginner, I will focus on AUD/USD for 3 months as planned. Therefore, I might need to make a trade plan 2 hours before an event and understand what the market is saying.
Also, if I know the market is consolidating and I opened a trade, maybe I should change my original strategy from trend focus to range focus strategy instead before or after an economic event.
This time I did not try to be too accurate with my entry points and was happy with my results .
My plan is to be patient and discipline with what I am learning and grow slowly as a trader.
My thoughts on this trade were that since China’s news was already priced in and the price ended up consolidating, the overall trader’s view, market expectation and sentiment were still bearish, so I waited for a downtrend and was almost certain the next move will be more likely to be a downtrend.
My trades have become more profitable, and I am getting one step closer to becoming profitable by the end of 2018 with my live account.
Based on an experiment on reading price action, candlestick patterns and support/resistance levels. Which I wanted to improve on.
The blue box - I ended up profiting. I saw a significant reversal of price action and a bearish engulfing pattern. (read about it)
As I saw the price bounce up and bears lose momentum, the candlestick pattern indicates that there is a major support that has appeared which is the orange line.
I consider this as a high probability trade, therefore, if it heads to a downtrend, I made sure my stop-loss is lesser than normal.
I believe the market will re-adjust itself, consolidate till more market participants enter, and the price will go back bearish after they see the economic event was worse than expected.
Let’s see if I learnt anything in the markets
Note i took a position long around the bottom of this graph.
I maybe should have waited a little longer before I enter my trade, there will be a lot of knee jerking for the first or two hours of this economic event. However, I still believe my analysis is about right, and prices will eventually go up and go bearish to a new low.
Anyways, I can learn from this experience and come up with different thoughts on how to interpret the market and stay on the side line and watch.
As I stood on the sideline watching the market, I came up with several interpretations on why prices consolidated longer than I expected, the best two reasons I can come up with is.
Firstly, I’d say that combining all the recent information about the Australian economy; there was no bullish economic data that could validate on moving it upwards.
Secondly, the market and trader’s view were synced on the price and therefore, price remains steady, and the reaction wasn’t an overreaction.
I stayed on the sideline and did not get involved, however, if I was going to trade this type of market situation, I’ll use price action, my technical range analysis, support/resistance and candlestick patterns.
Also, I should never try to predict the market and just focus solely on understanding the market.
Therefore, not every time a price moves dramatically does it mean a market overreacted plus being patient and seeing how the market is going to react, can be a viable strategy.
After watching a market correction now, it’ll make sense because the market participants will involve New York and London session increasing volatility. During the other times, there wasn’t much market participants.
But as you can see, I did make the right judgement that the old support will turn into the new resistance and also it did hit the new lows after that.
I did not expect it to consolidate for that long if I was patient in my trade, I was definitely partly right on my analysis on what was going to happen.
The consolidating part messed my trade set up and I was incorrect on it, but I love learning about the markets, so I was 2/3 right about the trade.
sorry i couldnt resist… i havent read all your posts. but id advice/offer you a little change in the approach of your trading. you correctly identified a possible support, then your trading idea was that the news will not brake the support (your orange line).
did you ever consider to just put a sell order in a “intelligent” distance below the support? (black lines i drawed)
you considered it as a high probability long trade. in 1 hours charts- (anything less then the daily) nothing can be considered high probability trade. the movements are just too random.
so you could have done both, you could have used your technique and went long with your usual stop loss and added my advice to secure yourself against a brake of the trend line. so in the end it would have not mattered if you were right on the direction or on the news, you would have earned money in both ways, you didnt need to be right at all
i neber trade currencies and never looked at the aud/usd. mane now a little top down analysis for you. the 2 red rectangles are resistance levels, when the prices hits them then expect turbulences and many changes in direction in smaller time frames. at the two red rectangles a change in intermediate trend towards up is likely, it will become a high probability long once the reversal has been confermed.
That’s ok.
I use the 15min chart to grasp an idea what the market is thinking and I think its fine.
When I came up with my analysis, I was in this position, 1 hour after the news event.
But as you can see further there were long tails afterwards, which hit my stop loss. My plan afterwards would have been short. As you can see from my trade, I traded after 1 hour 15 mins roughly. I don’t trade the news but the volatility that comes afterwards because market participants are interested in it.
As you can see, it JUST hit my stop loss. Lol damm! just saw it!!! from my previous post.
If I put my stop loss just 0.00005 lower, I’ll be safe and would have gotten those nice juicy pips, the green line was at 0.75760 my stop loss and where the tails hit, I believe.
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