Hey guys! I’m thinking of taking one of these awesome setups that I spotted, but I’m not sure what yet. Help me decide, please?
No matter how many times I get burned, I just can’t seem to stay away from this pair!
On the one-hour chart I’m seeing a potentially cool head and shoulders pattern that is supported by a bearish divergence, an overbought Stochastic signal, and a potential resistance at the psychological 1.0500. If I didn’t just lose my last AUD/USD trade I would’ve sold this pair faster than I sold my 6-inch heeled dancing shoes!
But because I have learned a thing or two on my last losing trade, I decided to look for other factors that might go against a short AUD/USD trade. First, I saw that the trendline that I pointed out in my Comdoll replay last week is still intact. Then, I also saw that the pair just bounced from the 61.8% Fib near the 1.0400 handle and is now hanging out at the 50% Fib support (the neckline for my head and shoulders). What’s more, I hear that commodities are picking up in markets lately!
Another trade setup I’m looking at is a short USD/CAD trade, but this would be a longer-term trade idea. The pair has been stuck inside a falling channel on the daily chart, which suggests that the overall trend is still down.
Although it formed a tiny doji then bounced from the bottom of the channel, I’m thinking that this might just be a temporary pullback. After all, Loonie bulls need to take a cocktail break too, right?
If the pair retraces, it could find resistance at the 38.2% Fib level, which is in line with the .9700 major psychological handle. That’s also a former support level and the previous week low.
Another possible short area is the 61.8% Fib, which coincides with the area of interest around .9800. The only problem is that stochastic is still climbing, which means that the Loonie bear party is just getting started.
I’m a bit unsure about taking this trade though because, well, my track record with swing trades hasn’t exactly been great. On top of that, it seems that oil prices are starting to slide back down now that traders think that the conflict in Libya is about to reach its end. This could mean that the Loonie’s happy days are over!
Then again, as I learned from my AUD/USD trade last week and recent comdoll price behavior, I should follow the current trend unless there’s a valid reason for it to end. Maybe I could see more confirmation during the U.S. retail sales release later and wait to see if the trend is over or not.
So which will it be, folks? I could really use your help here! Feel free to vote in the poll below or share your thoughts through the comment box below. I’m also on Twitter as @Happy_Pip if you wanna holla at me there!