Forex Trade Signals and Setups Jan 18th

Verified Profitable Trader

AUDUSD – Tentative, But Making Ground

After finally exiting the termination wedge we talked about in our previous post, the Aussie has finally broken the top of the formation.  However, the initial break was a false break, likely trapping bulls who took the break and are either a) still in the position, or b) shaken out.

price action 2nd skies forex audusd jan 18th

This type of price action and false breakouts generally create two scenarios;

1) The shaking out of the initial bulls via the false break could have prompted traders to take fresh shorts – which would actually be good for the bulls still in (or wanting to get in) since the institutional players may want to take it higher.  By having fresh shorts in, them getting stopped out would add steam to an upside play.

The way to play this is via a price action pattern – the breakout retest setup.

price action 2nd skies forex price action trading

2) the other scenario is the false break has trapped some new longs, so if the market fails to clear the breakout highs, then any aggressive selling back into the wedge would communicate this is what is happening, and the trapped bulls will have to exit, thus adding verve to the sell-off.  If this were to play out, expect price to drop minimally to the 20ema just under 1.0300 and then gun for 1.0250 in a jiffy.  The price action trigger to watch for here would be aggressive or impulsive selling, then price action holding under yesterdays low of 1.0358.  Traders can look to the 1hr and 4hr time frames for entries to play the short side should this play out.

For those of you looking to trade price action, make sure to visit our Advanced Price Action Course where we teach rule-based systems for trading Price Action.

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Also make sure to view out latest article Reading Price Action – Key Price Action Elements to Breakouts Part 1.



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