AUDUSD 📝
The First thing i do when making an analysis on a pair is to first look at the Daily timeframe to get an idea of rhe major trend of the market the daily timeframe gives a vivid market movement direction over a long period of time. If the major trend is uptrend on daily, i adviced looking out for buy opportunities (trending with the trend) and if the major trend is down trend on Daily i advice looking out for sell opportunities in the market for that day.
So, How do you know the major trend in the Market one may ask. There are many factors used to determine the major trend in the market but i will only give you the 2 that is evident.
1. Price action: thats the overall direction of the impulsive (long) movement in the market, (swing highs and swing lows) when compared to the direction of the corrective(short) movement in the market.
2. Using RSI(period- 14) level 50 on daily timeframe: whenever the value of RSI -(14) is above level 50, it indicates an uptrend market, and when the RSI (14) value is below 50, the trend is a downtrend market.
Reason why i explained this ahead is because this was adopted in making the analysis on AUDUSD. So let's dive right into the Analysis.
AUDUSD on daily shows a vivid uptrend movement and from the daily chart above we could notice that the trend has been moving in a swing highs and swing low price formation.
The first thing to do in this case is to identify the key points of reverval in the swing highs and low and to do this. We use the trend line and draw to connect the lowest points of the swing being form just as seen in the chart above on daily timeframe.
So after connecting the points we note that the 3 green highlighted point on the chart are the 3 swing lows(higher lows) connecting (touching the red trend line on daily timeframe.
Now looking at the top level we could see a strong resistance level on the chart ( where price has constantly rejected) at 0.69237. Price was headed towrads that point before a recent decline forming the latest swing high. However this is a pull back. Why?
Because price only came down to retest the previous swing high level before the recent high which resulted in the pull back @ 0.66935. See illustration below :
This level is our key interest @ 0.66935 because we can see signs of price rejection at that level. So a confirmation of this is if there is any form of reversal candle at this level.
So after having an Idea of where price is heading to on the daily timeframe (uptrend).
We move to a lower timeframe 4-hours, we could see the alignment of the analysis made on daily reolicating herr on four 4-hour timeframe. We are using 4hr to get an entry confirmation (swing trade). We could see that the key level @ 0.66935 happens to be a strong resistances turn support level and price has been constantly rejecting due to buy pressure.
So, this confirms an entry for a buy. So i would set my orders as follows :
Buy Pending order:
Entry: @ 0.66935
stoploss : 25pips just below the support level
Profit target: 183 pips @0.68693 (at the previous high)
And if you noticed, the profit target falls within the resistance level on daily timeframe. As seen below:
So this concludes the Analysis on AUDUSD.
ALWAYS REMEMBER TO APPLY PROPER RISK MANAGEMENT IN YOUR TRADES (VERY IMPORTANT)
#RFX
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