Aud/usd

[Mysticforex 13]

Let's talk about the AUD/USD. Actually, let's do more than talk, lets become intimately familiar with AUD/USD. Let's disect it, probe it, see where it's been, and try to figure where it's going. I opened a short position early London Session Friday @10170.

It hit an all time high about 6 weeks ago @10255. So, my SL is 10265. I am looking to TP somewhere around 99xx.

More to follow.....

[Mysticforex 13]

Here is a 4 hour chart of the AUD/USD. The red vertical lines going from top to bottom mark Mondays. The small red horizontal dashes are daily R3 and S3 levels. the blue horizontal dashes are Daily Pivots, and the wider orange horizontal dashes are Weekly Pivots.

 

Interesting to note, that on the Mondays I have marked, Price has hit either R3 or S3.

Most of my testing has been on GBP crosses. have not done much testing on the Aussie.

But I wonder how high is the probability that price will hit R3 or S3 on a Monday. My guess is the probability is pretty high. Lets look into that.

 

THIS IS NOT MY THREAD!

I want to hear everyone's view on the Aussie.

[Ingot54 13]

Thanks for the thread MysticForex

 

I am using charts that are not based on the same closing time as yours, so will download for comparability. My 4H charts are quite different.

 

Also, I am using the FXI Pivots Indicator, with all the levels blanked out. If I use the full levels, plus add the weekly on top, it gets unreadable.

 

Easy to rectify - can you tell me which Pivots indy you use please? If you can't upload it - just name it and I can probably locate it.

 

But to throw in a comment I am seeing the AUD as just tracking sideways atm , with a bounce off the 30 EMA. This *may* lead to a rally ... or not. My current chart setup is not revealing direction clearly, though the bias seems to be to rally right now. There are still recent highs to break - 1.0156 for example.

 

But my lower TF chart - the 1H is telling me a short rally is on the go, as it is testing the 30 EMA on that TF. I use other indicators - Stochastic (customised) and a (customised) MACD - but I will remove them because I don't wish to compromise other views I may be seeing with your chart.

 

So can you let me know which pivot indy you use, and I'll shoot over a chart

[Ingot54 13]

Well the R3 was clearly and absolutely nailed as the current high for the week (Monday).

 

Since then we have had a retrace of approx 50% the full length of the previous green candle. The current candle is not completed, but it has rejected the 30EMA for now and its next test looks like being the DAILY (central) Pivot.

 

MY feeling is (without getting too far ahead here) is that we need to see a break of that pivot, and a successful retest, if the R3 bounce is to get legs.

 

This is very much (imv) a wait-and-see, because the 30EMA is currently flat, indicating a market that has yet to show its direction.

 

EDIT: Just realized I uploaded the 1H AUDUSD instead of the 4H!! :doh:

 

So will add the 4H without removing the 1H which has its uses!

Edited February 7, 2011 by Ingot54
Uploaded 1H chart instead of 4H chart AUDUSD

[Mysticforex 13]

Ok.....

 

Anyone else have an opinion on what the A/U might do?

 

If we can get 5 traders on this thread, we should have 7 opinions.

[Mysticforex 13]

This is one of the reasons I got into the trade on Friday.

[Mysticforex 13]

Another setup:

 

A "Close" below this trend line on the 15 min. I will explain what the numbers in the upper right hand corner mean a bit later. Need some sleep.

Edited February 7, 2011 by Mysticforex
added :need sleep

[SIUYA 11]

(just to participate)

I actually dont trade setups on the AUD, except those similar to the rumpled one - 20 ticks from a low - whereby i just look for swings for a bounce, and trade some longs on it. Tough work lately as its been a bit choppy bit still ok.

Otherwise my only opinion on it is this.....

Watch China

[Mysticforex 13]

(just to participate)

I actually dont trade setups on the AUD, except those similar to the rumpled one - 20 ticks from a low - whereby i just look for swings for a bounce, and trade some longs on it. Tough work lately as its been a bit choppy bit still ok.

Otherwise my only opinion on it is this.....

Watch China

 

Indeed, a contraction in the Chinese economy will have an impact on the Aussie.

[Ingot54 13]

There is a concerted push down in the AUDUSD over the past hour - making the 4H candle fully engulf the previous one, with one hour left to close out the candle.

 

Can't say if it will punch through the Daily PP, but the indicators are happy about it, and the 8H TF is also looking strong - albeit with 5 hrs left before it too closes.

 

So the trade hinges on the successful penetration and re-test of the Daily Pivot, followed by resumption of the downtrend. The current DPP is EXCEPTIONALLY strong - it has been established and re-tested over the past 5 trading days. Therefore there is nothing to be gained here, by preempting the move, and taking an entry whilst price is yet to encounter the DPP yet again.

 

To preempt means to attempt to steal a few pips on any eventual down-move, and for the sake of maybe 15 pips gain, an early trade runs the risk of stopping out prematurely.

 

Trading calls for patience - and while the current position has a lot going for it as a short - the probability is not well enough in favor of that just yet.

 

Dangers:

 

a) News ... currently nothing of high impact imminent for at least 24 hrs. On Thursday the Aussie Employment/Unemployment data will print, and we can expect in the light of recent poor retail numbers, that any good number would be a surprise!

b) Technically we could have a 1-2-3 pattern forming, basing off the R2 and DPP, which *could* trigger another rally. However given the strength of the sell-off over these past 2 hours, the probability is smaller (imv) than the sell-off continuing.

 

Plan:

 

a) Wait for closure of current candle

b) Then ensure the successful breaking and retest of DPP (This can occur on the 1H or even 15M TF)

c) I would place a short entry around 1.0125 with a stop at 1.0188 ... 63 pips away. (A bit tight, but we have a strong move, and if price rallies to the stop (at R2) then we could safely day the short has failed anyway.

d) Potential profit point: In this case I would look at the 1.0000 level, given that successive Daily candles attacked the level unsuccessfully a dozen times from the 6th January, before finally breaking through on 1st February. This (parity) would then seem to be the only natural support line below the current DPP.

 

All other PP's are much weaker, and it is harder to see these levels repelling any sell-off.

 

Finally, while we may have identified certain contingent scenarios, we can leave nothing to assumption and chance. Ultimately the market will tell us what it is going to do - and our job is to be alert and to nail the move when it happens.

 

My personal expectation is that the new 4H candle will retrace - perhaps to 1.0160 (50% of previous 4H candle) - before driving down through the DPP. Of course it does not have to do anything we imagine - so be prepared for a rapid continuation of the sell-off as well.

 

Would be interested in the views of others.

 

EDIT - since I began composing this post, the 4H candle has indeed closed, and the 8H naturally has 4hrs left to run.

Edited February 8, 2011 by Ingot54

[Ingot54 13]

Current 15M candle has completed - if there is no effort to retrace I will short from the low point of the previous 15M candle.

 

EDIT: Bloomie just reported that China has just raised interest rates in the face of the highest interst rates for 30 months.

 

Of course Australia is riding on China's back, and this is seen as potentially slowing down the Oz economy, and thus the AUD weakness just now.

 

I have shorted from 1.0114

 

SL - just above high of previous 1H candle, at 1.0140, or 26 pips away ... very tight.

 

I have placed it this tightly, because price would need to re-penetrate the DPP, and if it does, then the high of the previous 1H candle would signal failure of the trade to me.

 

TP - Remains at parity

Edited February 8, 2011 by Ingot54

[Ingot54 13]

Well that was just plain silly.

 

Stopped out EXACTLY to the pip!!!

 

The price actually rallied to only 1.0137, but the platform has a 3-pip spread, so I got done! Serves me right for trying to tell the market where it would stop!!

 

I think I fell into the trap of trading on 4H and 1H TF, but placing tech stops on the 15M TF, or at least a lower TF.

 

Lesson - stay with the established Support/Resistance that the indicators are pointing to ... otherwise remove the indicators!!

 

I am not going to jump back in immediately - the trade is looking like it wants to pull back even further yet - but will wait for the right opportunity.

 

PS - Just checked the chart, and it looks like price *may* have respected the DPP and be heading south.

 

Will wait and see ... but will probably decide on an entry short again soon - with APPROPRIATE SL level! I would like to see lower lows first.

[MadMarketScientist 11]

Cool thread -- AUDUSD is one I sometimes do like to trade - wouldn't say consistently like the EURUSD/GBPUSD but it definitely has its opportunities.

 

I had a long today from 1.0159 which I would have adjusted to 1.0161 to get around that "xx60" level which I don't like to buy in front of. Target 1 was 1.0188 and Target 2 1.0217. Unfortunately I slept right through this trade :crap: It "only" hit the first target then I exit even in a perfect world where I can stay awake 24/7.

 

So with that said I would try the exact same trade again should it rally back up from where it is now which is 1.0145 at his moment though with a little less conviction on a second attempt.

 

 

MMS

[Mysticforex 13]

Ok, my lastest chart. I have been holding my short since Friday and don't like the negative roll. Tomorrow is Weds and triple roll. I would like to see a break of the dashed red line near the bottom of the chart. a candle close even better. This is 15 min TF:

Edited February 8, 2011 by Mysticforex
added omited word

[Ingot54 13]

Hi MMS -

 

I am now a bit more pleased that I had that tighter stop than I was 30 minutes ago. Price has continued to rally, and I would still probably have been stopped out at around yesterday's Rs @ 1.0157.

 

Sometimes these small losses are the best ones, and if the trade does not immediately go in your favor, then it is best to be on the sidelines until the setup is better.

 

The take-away lesson from this trade is that the DPP rules!

 

I was right to respect it earlier - if you look at the chart, price is all about the Pivot right now. I mentioned earlier that price had been solid around the PP for 5 days - and really it has been 7 days if you zoom out a bit.

 

For a rally, price is going to stall around 1.0160 and 1.0195, going on two failures at each level recently. I have no opinion on direction - the pair is in limbo, and I suspect it will take some unexpected employment data to really nudge the Aussie either way, on Thursday morning Oz time.

 

In the meantime I am cooling it now - the market is zzzzzz'ing until we get that "wake up" when the figures. Westpac vank Consumer Sentiment news in 9 1/2 hrs time is unlikely to be any sort of catalyst to move things either, given the minimal jolt the market received by the better NAB Business Confidence earlier today.

 

I'm hitting the hay - I don't like that large spinning top doji on the 1H chart - it is still respecting that DPP, and so I can only say:

 

"Nothing to see here folks - move along!"

 

One thing did emerge was the expected/probable the retracement of 50% of the previous 4H candle actually did come to pass, as I mentioned might occur in post # 10 (my plan ) so maybe we may yet see the break down to parity again in the Aussie!

 

And my original plan may have been the better one, before getting bogged down in the lower TF!

[Ingot54 13]

Ok, my latest chart. I have been holding my short since Friday and don't like the negative roll. Tomorrow is Weds and triple roll. I would like to see a break of the dashed red line near the bottom of the chart. a candle close even better. This is 15 min TF:

 

On zooming out a little, the AUDUSD looks like a tired chart. news is thin this week in the USA and the currencies are having a rest imv. Had I stuck to my original plan and placed my SL well clear, I might have still been confident of the trade succeeding.

 

As it stands I am not re-entering, and will be happy to take my lumps as they come now.

 

Off for a nap - it's been a long day!

 

Cheers guys.

[Mysticforex 13]

I was getting tired of this one. Looks like we were testing 10100 so I moved my S/l

to 10120 and took a nap. I awoke to find I had been stopped for +50 pips.

 

Now that I am out of my short it will probably drop like a rock. Lol.

I have a few errands this afternoon, will post again with my thoughts later in the evening or around London Open ( Thurs ).

[Mysticforex 13]

Well... I did say that now that I was out of my short it would drop like a rock... Lol

 

This would have been my re entry short: a Close below the TL on the 1 hour. But, I was asleep. My TP would have been around 9900 based on the second chart, which is 4 hour.

 

Now, let me explain so you have some idea where I get my #s from. On the second chart (4hr), price has been away from the 800 sma for 721 candles, more than 1 standard deviation ( 1 standard dev = approx 500 candles ). The 800 sma is currently @ 9729, but is moving up. and, although the A/U is usually dependable for this particular setup, It never quite hits the 800 ( personal exp ).

Anyway, here are the 1 hour and the 4 hour:

[Ingot54 13]

Now, let me explain so you have some idea where I get my #s from.

 

On the second chart (4hr), price has been away from the 800 sma for 721 candles, more than 1 standard deviation ( 1 standard dev = approx 500 candles ).

 

The 800 sma is currently @ 9729, but is moving up. and, although the A/U is usually dependable for this particular setup, It never quite hits the 800 ( personal exp ).

Anyway, here are the 1 hour and the 4 hour:

 

MysticForex - can you please elaborate a bit more on a couple of things:

 

1) The significance of the 1 standard deviation

2) The significance of the 800sma

3) What in the dickens is your "Radar Screen?"

4) What weighed on you to consider closing the trade? Hindsight is wonderful, but I suppose with the news release today re Oz employment figures, it was the correct course?

 

Cheers

Ingot

[Ingot54 13]

The S2 PP exactly bisects the last red candle at midpoint = 1.0051.

 

A possible scenario here would be that the current candle (on the 1H chart attached) might retest the S2 level before continuing its free-fall to parity once again.

 

There does not seem to be a peg between here and parity that could stop it ... an easy 50 pips??

[Mysticforex 13]

MysticForex - can you please elaborate a bit more on a couple of things:

 

1) The significance of the 1 standard deviation

2) The significance of the 800sma

3) What in the dickens is your "Radar Screen?"

4) What weighed on you to consider closing the trade? Hindsight is wonderful, but I suppose with the news release today re Oz employment figures, it was the correct course?

 

Cheers

Ingot

 

Good questions Ingot,

 

There's a long history in the evolution of this method. The 800 sma was chosen before my involvment with the group. I asked why the 800 also, just a random # that had to be large.

Since from the beginning they were looking for a move to an sma, it had to be large enough to make the move worthwhile even on smaller TFs. I am going to post a chart of what the original method looked like. In the beginning we only used the 1 hour TF. It is at this stage in the development I joined the group.

The black dashed line is the 800 SMS, the Red line is the 62 EMA, and the Blue line is the 200 SMA. Since the 62 is above the 200 ( barely ), and the 200 is above the 800, the pair is in a Bullish trend. The only counter trend trade we would have taken, is the MACD divergence I have drawn on the chart.

Now on this chart ( which is current BTW ) We would have taken a trend trade ( Long ) when the Stoch came out of oversold, assuming the 62 was still above the 200 SMA.

If the 62 EMA was between the 200 and 800 SMAs, there was NO TRADE ( that has changed big time ). There is no significance attached to an MA cross, just visual reference.

More To Follow.

[Ingot54 13]

The S2 PP exactly bisects the last red candle at midpoint = 1.0051.

 

A possible scenario here would be that the current candle (on the 1H chart attached) might retest the S2 level before continuing its free-fall to parity once again.

 

There does not seem to be a peg between here and parity that could stop it ... an easy 50 pips??

 

There is no such thing as easy pips!

 

Yes, price did exactly as expected - retraced to the S2 PP, but that is as far as it moved. On the 15M chart, it is consolidating in a 25-pip range. At some point price will move out of this band, of course, and we have to be ready.

 

I won't be bothering with the lower TF (15M) - I take my orders currently from the higher trends. The WEEKLY chart is in limbo as far as my indicators are concerned, but price action leads them, and we are currently in a retracement move.

 

My Daily charts are signaling "sell" from 1.0087.

 

My 8H chart is short from 1.0118.

 

And finally my 4H tells me to sell from 1.0132.

 

Once I have a downtrend confirmed, I set my orders to trigger from the low of the previous candle, as per the attached charts

[Ingot54 13]

The 800 sma was chosen before my involvement with the group ... just a random # that had to be large ... enough to make the move worthwhile even on smaller TFs.

 

I am going to post a chart of what the original method looked like. In the beginning we only used the 1 hour TF. It is at this stage in the development I joined the group.

 

The black dashed line is the 800 SMS

the Red line is the 62 EMA

the Blue line is the 200 SMA.

 

Since the 62 is above the 200 ( barely ), and the 200 is above the 800, the pair is in a Bullish trend.

 

The only counter trend trade we would have taken, is the MACD divergence I have drawn on the chart.

 

Now on this chart ( which is current BTW ) We would have taken a trend trade ( Long ) when the Stoch came out of oversold, assuming the 62 was still above the 200 SMA.

If the 62 EMA was between the 200 and 800 SMAs, there was NO TRADE ( that has changed big time ).

 

There is no significance attached to an MA cross, just visual reference.

More To Follow.

 

That MACD is interesting too - I wonder if you use it for the divergence purposes it so clearly displays atm?

 

You are causing me to rethink my MA strategy too. For example - sometimes it is as clear as day that the MA's are going to cross, but I have not been taking my trades until they actually cross. This is ok in the higher TF like Daily or 8H, but in the 4H and perhaps 1H if I am looking to fine tune an entry (this happens when the 1H ATR is >20 pips or so, if I am inclined to bother) the crossing of the MA's can mean big pips if a sudden move catches me unawares.

 

So I may begin to pay more attention to PA - ass seen in entries that break the low of the previous candle. As it is, all parts of my system have their place. I need to be seeing all the signals confirmed - not just 2-out-of-3. This has been refined so many times, and is as close as I expect to get to consistency in a strategy.

 

I am taking on board the things I am seeing from your charts. I am sure I am moving ground a little, in that you are showing me that there is more than one way to skin a chat (French) ... or a chart!

[Mysticforex 13]

Cont...

 

Several years ago one of the members of our trading group, Gary Fluker, who happens to be a genius with spreadsheets, decided to start crunching some numbers to determine on average, how long price is away from the 800 SMA. After about 1 year of entering data on literally tens of thousands of candles, He came up with an average and the standard deviation. The "Radar Screen" in the upper right hand corner is the latest version of of a few we went thru.

 

This works on all Majors, The faster moving pairs are better because you can use it more effectively on smaller TFs. I have had a good deal of success on the 1 minute GBP/JPY for example.

 

The A/u setup was based on the 4 hour TF. Entry of 10170 was based on PA on the 15 min TF. Knowing we had an all time high recently at 10258 meant I could use a tight stop of 95 pips for a possible gain of 150 pips or more.

The reason I exited early with only 50 pips of profit (as I type this I would be up 130 if I had stayed in ).

is a problem I have with patience That I constantly struggle with.

That and my belief that the 4 days I had the margin tied up on that position, I could have made more on another, faster moving pair. Then again I could have lost money on another trade so I'll take the 50 pips and be happy.

In the short term, my bias is still bearish A/U for the short term.

[Ingot54 13]

Cont...

 

Several years ago one of the members of our trading group, Gary Fluker, who happens to be a genius with spreadsheets, decided to start crunching some numbers to determine on average, how long price is away from the 800 SMA. After about 1 year of entering data on literally tens of thousands of candles, He came up with an average and the standard deviation. The "Radar Screen" in the upper right hand corner is the latest version of of a few we went thru.

 

This works on all Majors, The faster moving pairs are better because you can use it more effectively on smaller TFs. I have had a good deal of success on the 1 minute GBP/JPY for example.

 

The A/u setup was based on the 4 hour TF. Entry of 10170 was based on PA on the 15 min TF. Knowing we had an all time high recently at 10258 meant I could use a tight stop of 95 pips for a possible gain of 150 pips or more.

The reason I exited early with only 50 pips of profit (as I type this I would be up 130 if I had stayed in ).

is a problem I have with patience That I constantly struggle with.

That and my belief that the 4 days I had the margin tied up on that position, I could have made more on another, faster moving pair. Then again I could have lost money on another trade so I'll take the 50 pips and be happy.

In the short term, my bias is still bearish A/U for the short term.

 

The WEEKLY chart is very interesting right now.

 

The trend is still strongly UP ... but ... there is a bit of conflict on the indicators (mine).

 

MTF Stochastic is happy to confirm a rally is still in place, but MACD is showing divergence indicating weakness in the trend.

 

imho this is understandable (MACD) because of the consolidation ocurring on the weekly chart. Since October 2010 (a period of just 5 months) the AUUSD has been up arounf this all time high no less than 6 times now. And since Christmas day, there has been NO price breach the 1.0252 high. That bit was included to show WHY the MACD is tracking down - momentum is slackening right off.

 

BUT ... the uptrend still remains the go.

 

At the moment there are 2 possibilities with the weekly candle:

 

1) It will bounce from here, which is the 50% retrace level of last weeks nice green candle. Current price is also SUPPORT - around 1.0020 +/- 40 pips, forming a zone of support right now. As with all zones, price can penetrate wherever it likes, briefly, and then bounce to respect that zone. I can see three reasons, therefore (including Stochastic) to support a rally from here.

 

2) It will continue to retrace, ignoring support, and dip back through parity. The MACD is alluding to this as likely, and given that price can not remain static, or even (narrowly) range-bound for too long, It may just be that the MACD will be correct in its indication.

 

What we need to see in the AUDUSD (opinion only ... usually flawed) is momentum gathering. Right now, the Fundamentals are not supporting a tearaway rally. I hesitate to bring Fundamentals in to my charting considerations, because on the lower TF we trade what we see, not what we think.

 

But on the higher TF like Weekly and Monthly (which I do not trade ... yet) you can not afford to ignore the economic story. To complicate that view, the markets have not traded on Fundamentals for nearly 2 years - it's either "risk-on" or "risk-off" and lately it is "risk-on" regardless of the news! Traders buy the USD when the news is good, and they buy it when news is bad ... go figure! Safe-haven ... or gambling?

 

So all of this can only ever be taken with a grain of rock-salt! Eventually the serious money will show up in the weekly trend, and that's why I have brought this into the picture right now - we are at a watershed 50% retrace, coupled with support going back to October last year.

 

We have to spot the higher trends, imv, and trade the lower TF with these trends in mind.

 

Would be happy to hear the views of others on this approach.

 

It helps me to see whether there is any grunt left in this down-trend, or we are about to be sprung a surprise in the form of a rally. The chart, to me certainly does not discount that possibility right now.

 

EDIT: Price is only 6 pips from the S3 PP, and it may be possible that around this zone - just 14 pips above parity - the Aussie will find it pretty tough to continue to drop. Let's see how this dog hunts!

 

Price has consolidated over the past 5 hours, around 1.0030, so support is being realized - at least temporarily.

Edited February 10, 2011 by Ingot54
Additional Observation