Direct from the desk of Dane Williams,
exclusive to leofinance.io
Key Takeaways:
- AUD/USD breaks out of intraday descending triangle... to the upside.
- Price moves into no-man's-land between daily support/resistance zones holds above daily support/resistance zone.
- Bias on the pair moves back to neutral.
AUD/USD Technical Analysis
Price is currently breaking out of the AUD/USD descending triangle that we had been following on the blog.
Take a look at the price action on both the daily and then 4 hourly charts below.
AUD/USD Daily:
AUD/USD 4 Hourly:
The frustrating thing for me, however?
Well, it's breaking out in the wrong direction!
The highest probability trades when it comes to descending triangle setups, is to trade a break down through support.
When they break to the downside, you're literally watching the buyers being devoured by sellers in real time.
The buyers get weaker with every lower high until there are none left and the only direction for price to go is down.
But here, we're seeing the buyers take back control of the market.
While you can still trade this particular triangle breaking just as you would any other, I personally won't touch it because there's no effective way of managing my risk.
As you saw in yesterday's USD/JPY long trade walkthrough, the support/resistance zones that you see on my chart tell me if I'm right or wrong.
If price goes through support after I've bought for example, then I know that I'm completely wrong and that the trade is invalidated anyway.
In this particular trend line breakout, even if I place my stop the other side of the line, I wouldn't technically be wrong until all the way down to the triangle base.
Using horizontal support/resistance zones as clear lines in the sand for market direction bias is key to my strategy and as a result, I have to respect that and let this one slide.
If I can't manage my risk into at least an easy 1:3, then I let the setup go by.
It takes real discipline because I'm a generate gambler like the rest of you in the crypto space, but trading is different!
With this break higher, we now won't be touching the Aussie until it rallies all the way back up to daily resistance at the 78c zone, or back down to the triangle base again.
Only then will we have a clear horizontal zone to manage my risk around.
Best of probabilities to you.
Data to Watch:
- Fed Chair Powell Speaks (USD)
- Employment Change (AUD)
- Unemployment Rate (AUD)
- Core Retail Sales m/m (USD)
- Retail Sales m/m (USD)
Why not leave a comment and share a chart of your own in the comments section below? All comments that add something to the discussion will be upvoted.
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