Which Way Will AUD/USD Break Out? – Avoided a Fakeout!

Trade Cancelled: 2012-05-08 4:47

Good morning, friends!

After taking into consideration all the signals on the lower and higher time frames, I decided to take a rain check on AUD/USD.

If you remember, I pointed out before that the 1-hour chart is hinting that the “breakout” on the 4-hour chart is a false one. Well, it turned out to be both right and wrong. You see, the pair rose a few candles after we spotted the bullish divergence, but the pair also fell all the way to the 1.0250 handle a few days later.

AUD/USD Fakeout

If I had bought or shorted the pair, I think I would’ve been stopped out either way! Good thing I decided to stay by the sidelines. Maybe Dr. Pipslow’s articles on being patient are finally rubbing off on me.

I might have missed a pretty good move on the pair this time, but that doesn’t mean that I won’t come back with a vengeance next time! Who knows, maybe there will be another breakout setup waiting for our attention!

How about you? Were some of you able to take advantage of the price action? Don’t hesitate to share with us!

Trade Update: 2012-04-19 11:00

Are we seeing a breakout on AUD/USD, or are we looking at a false break?

AUD/USD Breakout

Just when I was about to pull the trigger on AUD/USD, I zoomed in on the 1-hour chart for confirmation of the “breakout” that we’re seeing on the 4-hour chart. Lo and behold, I spotted a potential deal breaker!

On the chart above we can see a bullish divergence and an oversold Stochastic signal, which popped up while the pair is near the 1.0350 minor psychological handle. Not only that, it also looks like the most recent candle is about to close as a hammer!

Will 1.0350 become a support-turned-resistance level, or will the pair go up to test the falling trendline of the triangle? Ack, I should probably wait for more signals.

Trade Idea: 2012-04-19 02:29

I’m baaack! I may have lost my NZD/USD trade last week, but that doesn’t mean that I can’t start a new winning streak!

This time around I’m turning my attention to AUD/USD, which is currently showing a nice symmetrical triangle on the 4-hour chart. I just hope that I’m around when the Aussie bulls and bears finally reach a decision!

If you have marked the levels on my Comdoll Trading Kit this week, then you’ll know that the previous week and WATR levels are looking like good targets in case the pair breaks out. Right now both levels are presenting reward-to-risk ratios of 1:1. Probably a good idea to wait, huh?

AUD/USD Triangle

I hope it breaks to the downside though. At least then the move would be supported by the RBA’s surprisingly dovish statements early this week as well as the disappointing NAB business confidence report we saw a few hours ago. Not only that, I’m also not comfortable buying the Aussie when markets are so jittery over Spain’s bond auctions and contagion concerns in the euro zone.

How about you? Anyone out there have any plans on trading this pair? I’m still thinking if I should still trade it if it breaks to the upside, or if I should just wait for a downside break. Any tip would be much appreciated!

Oh, and don’t forget to check out our risk disclosure, too!

Chips, dips, and lots of AUD/USD pips!

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Good luck in your trades this week, buddies!

Happy time

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  • Kuzhis

    I think that US data today will show us the way

    • happypip

      Yeah, Aussie traders didn’t react much to Spain’s bond auctions. Are you trading this setup too? :)

      • Kuzhis

        Well those auction results didn’t surprise, I think nobody expected those yields to decrease. 
        Yeah I’m waiting to get in that trade at some point today ;)

        • happypip

          Were you able to get in an Aussie trade today? It looks like we might be seeing a continuation of yesterday’s risk rally. :)

  • T Traykov

    There it goes!

  • Oz turTle

    Hey Happy Pip, this is my 1st post!
    It makes me smile when triangles are spotted because, as per your question, they don’t show where the market is going to go.

    My view is:
    Daily chart shows a down trend was recently broken by a higher-high (HH) on 12/4/12 (@1.0449). If the low of 1.0304 on 17/4/2012 holds, then I am looking for a re-test of 1.0449 as a continuation of an uptrend.  

    • happypip

      Hey  Oz!

      Thanks for pointing out the broken trend line on the daily chart! Are you buying above 1.0450 then? It’s the top WATR (1.0450)  level this week, while last week’s high is also at 1.0453.

      Thanks for your input. I really appreciate it! :)

      • Oz turTle

        I won’t be buying; the low of 1.0304 looks under threat at present, so I’d be tending to favour the short side for now.

        I’d only consider long on a smaller time frame where an uptrend has been confirmed.

        For the 4 hourly chart, I won’t go long until 1.0450 is breached.

        • Oz turTle

          AUD/USD looks like a sideways mess on 1hr and 4 hr charts (10,20,50 MA’s all tangled).

          Given dovish RBA expected to cut rates next month I’m looking for 1.0304 to be broken, hence, the downtrend to continue. (If correct, this means the move up to 1.0450 will be a ‘fake out’.)

          Once MA’s start to fan out I’ll be looking to ride the next wave short.  

          • happypip

            Yes, I’m really fundamentally bearish on the Aussie right now. But it looks like the bulls aren’t done buying yet, so I’m also waiting for more signals :)

  • RazorX

    Hi Happypip

    Looking at the top chart I’d say the pin bar puts a stick in things! Bulls not ready to give up yet, or perhaps just making a false move and then picking up those who have tight stops? Good call on looking at the 1hr and waiting for confirmation!

    • happypip

       Thanks! I still don’t know what to do with the pair at the moment, so I’m focusing on my NZD/USD trade for now. How about you? Do you have Aussie trades this week? :)