Aussie Trade Update

Interesting price action is occurring right now as the AUDUSD is breaking a 4 hour resistance trend line. This potential breakout was already mentioned in last week’s Forex recap and Nathan’s article. The same development is taking place on the AUDJPY. Are both trades worth trading or is one of the two better suited? This question and more are reviewed below.

22- 4- 2014 au 4

AUDUSD

The AUDUSD retraced to and roughly bounced at the 61.8% Fibonacci retracement of the last swing high swing low and is now breaking a resistance trend line on the 4 hour chart. The trend line has multiple (4) hits and a balanced angle (40-45 degrees). This indicates a well respected and seasoned trend line as our trading room members are diligently aware of.

The break of that trend line has occurred: there is a decent sized and clear bullish candle towering above it. The candle’s close is also near the candle’s high which confirms the control of the bulls within those 4 hours. Therefore an entry upon the closure of the candle already suffices in my opinion with a stop loss below the bottom (and in my case below the 78.6% Fibonacci retracement – just in case). Take profit (TP) has been left open and a trail stop loss will be used to exit the trade.

22- 4- 2014 au 1

Be aware that there is always a chance of a (small) retracement of the break out candle prior to lift off. Any of the Fibs mentioned on the 1 hour chart (magenta) have a decent probability of acting as support for upside continuation.

From a weekly perspective last week’s bearish candle was a retracement of the bullish candle prior to it. However, the bullish candle’s low (and high too) was not broken, thereby making it an inside candle with plenty of potential space towards the next resistance (Fibs and top).

22- 4- 2014 AU W

AUDJPY + USDJPY

The AUDJPY has a similar bullish structure as the AUDUSD, but how could the Yen currency potentially impact the AUDJPY? In these cases, the USDJPY is certainly a currency cross worth examining closer.

22- 4- 2014 aj

Here the pair is showing signs of corrective price action. The downside price action had in fact more momentum than the current slower up move. Also price has respected all of the retracement Fibs such as the 23.6%, 38.2% and the 50% by pausing for substantial period of time at those levels.

22- 4- 2014 uj

When zooming out to one time frame higher, the daily perspective is fully confirming the lack of a current trend. Price is stuck in a wedge and needs to break out of this corrective chart pattern before a sustainable trend could be expected. Despite the lack of trend, the “flow” (momentum) of price seems to be bearish – especially the last fall has its signs of power.

With these levels of insecurity connected to the Yen currency the better choice seems to be the AUDUSD.

22- 4- 2014 uj d

Which one do you think is better? Let us know down below! Don’t forget to take a look at other articles like Jack’s articles on starting the trading day and on the art of speculation.

Thanks for sharing this article and wish you Many Pips!

Happy Trading!

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Chris is the head of the mentoring program and trading room at Winner's Edge Trading. He has a passion for technical analysis and helping Forex traders achieve their goals in trading. Chris has been trading for almost 10 years and is most fond of the Double Trend Trap (as a strategy), moving averages (as an indicator) and Fibonacci (as a tool).
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  • Chris

    Thanks mate!

  • NathanTucci

    Thanks for the update and reference, Chris, good stuff

  • Chris

    Dont be scared with my future replies – its just my profile picture ;P

  • Chris

    Sounds good – EA and GA are on the list for next article :)

  • Chris

    Yes UJ is pushing up again. Will be interesting to see how the daily candle closes? A pinbar at the bottom or bearish engulfing twins.. we’ll know a few hours from now :)

  • http://jbmaverick.wordpress.com/ Jack Maverick

    You know what might be worth another review? – Eur/Aud. Just a thought.

  • http://jbmaverick.wordpress.com/ Jack Maverick

    (And thanks much for the shout out)

  • http://jbmaverick.wordpress.com/ Jack Maverick

    ” the better choice seems to be the AUDUSD.”
    Good – that’s the one I bought. :)
    Although counting pips, Aud/Jpy has made more of a recovery from last week’s lows than Aud/Usd…so far anyway.