AUDUSD Pullback Trade

I have mentioned in the past that I don’t always post up all the pairs I am looking at or those on my watch list for my weekly Forex setups.

There are many reasons for this but the biggest one is, I want to post up the “easiest” to understand.

Well, maybe that is the second biggest.

The biggest reason is, this site is for learning. 

  • This was never designed as a signal service.
  • This was never designed to dazzle you and then throwing up a paid site
  • Never designed to sell you anything

Nothing makes me happier with the work I do here than having a viewer show me a trade they took that I didn’t post.

I didn’t post – but they used what they have learned from the charts that I post.

Now that I’ve covered that, let’s get to the reason for this post.

 

Trading The AUDUSD

The large spike in many of the crosses have really tilted the market and the spike in the AUDUSD for one day, was virtually 275 pips.

The next day had strong upside as well and recently, the pair has been lazy.  You can see it on the chart but put up a 1 day ATR and look at the line.

Still, the question to ask is if an impulse move deserves another leg.

If it does deserve another leg, then you can use a pullback strategy to trade it.

This pair did and the one thing we needed, is for those holding longs in the AUDUSD to not suddenly bail.

If the USD gained strength in this pair, we’d get a strong corrective move which is not what I ever want to see in a pullback.

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AUDUSD Pullback Trade

When price is pulling back, I have always suggested dropping into a four hour chart.

In the four hour time frame, you can see price form patterns and get a read on momentum (the small green triangle on the broker chart is the trade entry)

This is a simple pullback trade aided by the four hour chart that gave me a structure to trade.  It was really a breakout from a smaller time frame range into the pullback.

Yes, I used a breakout not as a trading strategy, but as a trade entry into a higher time frame setup.

When I took the screen capture, the trade was up 95 pips on a 60 pip stop loss.  When  I wrote this, it was up 113 pips.

Trade management is:

  • Scale out 30% of the position
  • No risk trade – break even stop loss
  • Monitor for weakness
  • Trail the stop using ATR

Profits are banked, the trade is a winner, and leaving a runner to make more $$$.

 

Complicated?

There are too many sites that will make trading appear more complicated. (Yes, they probably want to sell you something)

It is simple to trade.

It is not easy to trade.

But these patterns, pullbacks for this example, work in any time frame and any instrument.

You just have to know what you are looking for, and only look for THAT.

Add in risk management, trade management, and consistently execute………..

Then you will find success.

One Response

  1. Michael

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