I made the comment in another thread yesterday that if I focused on certain longer-term measures, I might be able to capitalize on some monster moves in price action, even though I am not a "set your trades and walk away" kind of operator. I then cited EURAUD as an example of the type of setup to which I was referring… And as it turned out, it was indeed an opportunity that offered a generous amount of potential profit...
Similar to EURJPY and GBPJPY, though AUDJPY has a neutral 12-day baseline, the 24-day baseline remains bearish (after turning south in July) as do the 32- and 40-day measures (after turning south in August). This suggests that in the longer run, the pair ought to eventually head lower. So, given that the rate is currently at the upper extreme of the six-day price range, with the 2½-hour baseline having just adopted a southbound trajectory, it is theoretically possible that the Aussie dollar-Japanese yen is under pressure to initiate a descent right now, never to return to this level at any time in the near future. I have therefore opted to sell the pair, even though technically, I should probably wait for a downward hook in the 2- and 4-day baselines first, as confirmation.
No, it was not the top. So, what played out was essentially the scenario of which the following is meant to take advantage... More specifically, you had price pull back in light of bullish 16-, 24- and 48-hour baselines, resulting in your being stopped out. This is the same situation that now exists, so let's see if you experience a better outcome by buying the pair this time...
One way of looking at this scenario is from the perspective of the daily charts, where the pair is deep into the lower region of the six-day price range, with the 32- and 40-day baselines decidedly bullish. This could lead me to believe that the Euro-Aussie dollar just might be initiating a fresh ascent, leaving the recent local low of 1.5640 far behind for quite some time. But, that kind of thinking is what got me stopped out by AUDJPY yesterday. The other perspective is from the hourly chart, where the situation could be viewed as a pullback in the bearish 16-, 24, and 48-hour trajectories, in which case, it would make more sense for me to pocket my gains now, and then look to short the pair when a reversal in the 15- through 120-minute moving averages indicate that the intraday trend has once again rejoined the bearish higher/slower trend lines. This is the more prudent option and the one that I will elect to take, waiting until there is a reversal north in the 24- and 48-hour baselines before I opt to try buying and holding EURAUD.
Though the Euro-U.S. dollar is near the bottom of the six-day price range, I don't really expect it to continue climbing, due to the six-day trend being so bearish, along with the 48-hour baseline and all of the other slower/longer-term trend lines. With the 1-hour baseline having turned bearish and price now positioned below the 2-hour measure, I went ahead and entered a short position, though the more conservative choice would have been to wait until AFTER the 2-hour baseline was actually evidencing a downward hinge as well before doing so. In short, I am concluding that this 24-hour trip/leg upward was just a temporary pullback in an, as of yet, still bearish overall trend south.
Though the Euro-U.S. dollar was near the bottom of the six-day price range, I did not really expect it to continue climbing, due to the six-day trend being so bearish, along with the 48-hour baseline and all of the other slower/longer-term trend lines. However, the 24-hour baseline just turned bullish, crossing above the 48-hour measure, with price now located at the top of the 24-hour price range. This is suggestive of a full-fledged reversal north, so I am likely to buy this pair if it bounces off of the next pullback.
When it comes to USDCHF the 4- through 24-day baselines are all decidedly bullish. Moreover, the pair looks to have bounced off the bottom of the 24-hour price range, all of which leads me to conclude that buying the pair at this level might not be such a bad idea. The only problem is that the 24- and 48-hour moving averages are currently bearish. Consequently, I will need to be prepared to exit the position (hopefully, with profit) if the 47-minute baseline (and faster moving averages) turn around and start heading south again. But ideally, it would be great to see the pair maintain its overall bullish course, never to return to this level in the near future.
The Aussie-USD’s 40-, 32-, 24- and 12-day baselines all turned bearish around the end of June this year. Nonetheless, the pair has been climbing ever since the beginning of this month. However, with the rate now being located just 80 pips or so below what I calculate as the upper extreme of the 6-day price range, the 4-, 6- and 8-hour baselines are looking like they might be running out of bullish momentum. Moreover, 0.7415 appears to have been an area of significant support/resistance in the past. All of this has me on the alert to watch for whether the 24- and 48-hour trends turn downward sometime next week. If they do, I will enter a short position in the hopes of catching the beginning of an extended descent south.