Forex Trade Setups Oct. 11th

AUDUSD – Failed Breakout – Breakdown Now?
After failing to brakeout and hold above the .9900 and 38.2% fib of the major downmove (.9912) from 1.0775 – .9400 level, the pair has sold off quite aggressively over the last two 4hr bars forming a lower top in the process suggesting the pair is likely turning in the short term.

On top of all this, the pair is breaking below the 20ema for the first time since Oct. 5th which has held the pair up nicely so this is also communicating a likely further breakdown short term.  Traders can look for pullbacks to the 20ema on the 4hr time frame should this pair close below the 20ema.  Any pullback to the 20ema after the close below could be a good trigger to get short with tight stops above the .9900 level which was support and could not be resistance.

However should the pair fail to close below the 20ema and simply reject off of it on this current candle, watch the next candle for either a break/close below or a rejection off of it which would likely signal a short term rise.

Check out a great article we wrote on Forex Trading Lessons from the Archery Range.

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  • Andreas

    looks like your previous setup was spot on, except for the minor pullback into the mid .98 level. But honestly, what is fueling this rally? Are these moves we’re seeing really justified? Would love your opinion on this, I’m sitting out for now waiting to see if sentiment has really turned bullish for risky assets.

    • That is why we wait till the end of the candle to trade. It was funny because in the beginning, I was watching the 2nd red candle head into the 20ema and at the time it looked really bearish pressing below it…but experience was telling me we have to wait till the candle closes and when it did, it rejected nicely off the 20ema giving a great setup to go long off the 20ema which worked out really well!

      Once it took out the recent swing highs at parity, it was off and running.

      In regards to these 2 STD moves, im not sure much is justified in this market but China sold USD as their counter to the trade wars the US is instituting on the yuan so that hurt the greenback. Top that with a reuters currency malfunction for their execution and things got crazy in a hurry.

      The one thing we have to consider is that this market is broken so regardless if there is a taste for risky assets or not, price action trumps what is rational. learn how to trade price action and it won’t matter whether the market has an appetite for it and you’ll be in the right trade.

      Hope this helps but some great questions you asked.

      Kind Regards,
      Chris Capre

  • Andreas

    Too bad I didn’t have that experience telling me to wait until the candle closed (I’m a fairly new trader). I had a tight stop loss order in place which was triggered when i was sleeping. Otherwise I had the perfect setup!
    As for price action trumping what is rational, I could not agree more. I’ve especially noticed it in recent weeks. Sadly I’m an extremely rational person and emotions do get the best of me sometimes :(.
    Thank you for your thorough response! I look forward to reading more of your articles!

    • Hello Andreas,

      Yes, its a critical thing to wait till the candle closes because until it does, it could be anything! I actually have a good article on it which you can find here Trading the Open and Close of the Candle.

      It talks about the importance of how to trade them and waiting for the close.

      One thing to notice is how I did comment at the end of the article to watch for a rejection for if it does, it would likely mean a large upside move which is what played out.

      With that being said, if you really want to learn how to read price action, you should check out the Price Action Course which will tell you how to read movements like this, not get caught on the wrong side and how you can take advantage of these moves.

      Kind Regards,
      Chris Capre