BLOG | March 20, 2017

Trade Update: AUD/USD monthly target tells tale of overbought market

AUD/USD monthly target tells tale of overbought market

Hello traders, Brian Thomas back again with your Forex Update! Recently, I’ve been looking at opportunities with the help of the skills I’ve learned through the Target Trading course.  The price target set for the month of March for AUD/USD is still to be reached and we have a nice sell-high price that has been established this morning.  I think the market structure might mirror what we saw on the left side of the current high. That structure might look something like the following:

If the above situation holds true, I’ll be looking to trade on the right side of a counter trend line break in the direction of the UN-HIT monthly target in light blue.  This is the MISSED target from the month of February.  Again, these price points are very important to the market because it pulls the market towards them. “OK Brian if this is the case, what might an entry plan look like on this pair?” I’m glad you asked…

In my opinion, this is a classic technical set up. It offers us great risk-versus-reward on the pair with a deep .860 pullback that missed the monthly target from February (below our current A/B boundary in the direction of the expected extension),  given the current rate of pullback in this market.  What would really make this trade pop would be a U-Turn on the gold market or continued negative sentiment on the USD.  The USDX chart looks like the negative sentiment short term, might be over.  However, the gold chart looks like we might see a u-turn next week. There exists the possibility that the gold market may test a deeper retracement again. If that is the case, we can forget about the missed monthly target from February on our AUD/USD chart, because gold will take that market north on that test of the deeper .618 retracement.  Now, we have to wait on the AUD/USD chart for the right side of the trend line to break and the low marked with the sell arrow BEFORE we start selling.  This will help us confirm that price is in our favor and that the sentiment is such that the overbought AUD/USD market will start to sell off.

If that is the case, we can forget about the missed monthly target from February on our AUD/USD chart, because gold will take that market north on that test of the deeper .618 retracement.  Now, we have to wait on the AUD/USD chart for the right side of the trend line to break and the low marked with the sell arrow BEFORE we start selling.  This will help us confirm that price is in our favor and that the sentiment is such that the overbought AUD/USD market will start to sell off.

Again, I believe the above chart will be our true guide on the AUD/USD trade above.  If this u-turns we have a very nice trade that will shape up in our favor but if we get that deeper potential test of the .618 pullback we have no trade.  We have to wait to see and wait for the true price to tell the tale. The fib on the Gold chart is large and will take several weeks to fill.

I hope this helps you guys make some money out there and again, I hope this post finds everyone that reads this in good health and in time to make a positive impact on your trading!

 

BT

Summary
AUD/USD UN-HIT: Monthly target tells tale of overbought market
Article Name
AUD/USD UN-HIT: Monthly target tells tale of overbought market
Description
Analysis of AUD/USD and where it is heading for traders to best prep their current trading plan.
Author
Publisher Name
Forex Tips

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