This post is a dissection of the EUR AUD as it stands on 2/2/2018. There is no immediate upcoming trade. This post is for educational purposes only, using Price Action as the methodology.
The Month chart is showing lower highs and lower lows indicating a bleed off in the market. The MACDBB indicator (my only sub chart indicator I use) turned south years ago. There is a short Dynamic Zone starting at 1.57080. When price enters these zones, it tends to accelerate.
Recap: Monthly is already short
On the weekly chart below price appears to be a last gasp for fresh air to the upside. However, Price Action is not indicating an immediate reversal.
Recap: Wait for a double top
On the daily chart (which is my favorite to trade on) we have a strong bullish move into a long Dynamic Zone area. (Blue rectangle)
We need a reversal signal first to enter a short trade. And we do not have one yet.
This is a sit on your hands situation, there are too many conflicting signals
- Monthly (which only is used for long term trends and not trading) is weak.
- Weekly has an engulfing bullish candle.
- Daily and all other time frames are showing bullish.
What I would love to see develop is a double top in the weekly with a close below the horizontal redline. Then we have tons of space to the downside.
Then on the daily we want to see a close below the red line. (See below)
Price Action Trading is time dependent. Traders using this methodology need to be focused on their time horizon when determining a trade setup. If you are a monthly trader, then your “trade” could take months or years to payoff.
If you are a weekly trader, then the same criteria applies. It could take weeks or months for the “trade” to develop.
The sweet spot in the FX markets for a retail trader is the daily chart. You can control your risk, enjoy long term benefits and not have to wake up every 2 hours to check on that trade.
Circling back around to the charts in this post, if you are a retail trader, there is no trade…but there will one be soon!