AUD/USD, Continuation of a short term trend on M30
Ivica Atanasovski | Feb 25, 2019 12:55PM ET
I am spotting a potential opportunity to go long on AUD/USD on M30, according to the system I am trading. (This is not my system)
This is a trend trading strategy based on 3 SMA (30, 50, 100). These are the conditions for the setup:
1. All 3 SMA are in order (30 above the 50, 50 above the 100)
2. All of them are parallel to each other (no crossover)
3. Price is on the right side of the 50 SMA (in red)
4. Price never touched the 100 SMA
5. Harmonic bounces of the D.A.S.R (Dynamic Area of Support and Resistance, or the area between the 30 & 50 SMA)
Price has already made 2 consecutive swings to the upside with pullbacks that retraced exactly to the confluence of support, so I have a valid bias that another swing to the upside is in order. This is the second day in a row where price is making a new high, and it reached a new high today (0.71837)
The retracement is already in place, and we can already see where our strongest point of support is, since we do have a confluence of support at the 38.2 Fibonacci area (See Image)
As we can see from the screen shot, we have the following confluence:
- Clearly definable ascending trendline
- Fibonacci Level of 38.2
- Previous Swing High
Also there are no conflicting signals on the longer time frames (see image) and combined with the fact that there are no major news events coming out for this pair in the following few hours, I firmly believe that this is a strong setup from a technical point of view, and that the bulls are going to hold the fort, and eventually make a new swing to the upside, taking out todays swing high, and aiming for higher grounds.
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Course of action:
Since I like to keep things fairly simple, and do not want to enter the trigger chart, my signal will come directly from the setup chart, which is the M30. I will wait until price catches up with the 30 SMA (in green), and upon the first candle to close above the 30 SMA (after the retracement has finished) I will trigger my long position.
My Stop Loss will be placed either a few pips bellow the lowest point of the retracement, or a few pips below the 50 SMA (in red).
My first target is going to be the previous swing high, where I plan to cash out 50% of my position, and after that I am slowly going to cash out small chunks from my position, as the projections bands are being hit (see picture 2).
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