Sorry for being quiet this week trading view but I've been running things on the road. Also the markets have been pretty quiet this week so there just hasn't been a lot to share. Today seems to be a little bit better and I wanted to bring a potential buying opportunity on AUDUSD to your attention.
I'm already long this pair from earlier in the week. My position has been doing absolutely nothing but sitting there, but with our recent movement in price action another opportunity has appeared as well. This structure based opportunity can be looked at like a 2618. Price action has come down to previous structure support and held, followed by a HHHC and is now retracing.
The HHHC gives us a bullish rotation and the present retracement is a perfect chance to hop aboard. Also the fact that the RSI is showing us hidden divergence gives me some added confidence and potentially added points for those of you that trade the Combined Technical Scoring System (CTS).
The risk reward looks good on this trade no matter where you look to get long, so the only question left is "How Can I Get Long?" And the answer to that should be simple. What does your trading plan say are your rules for entry on this type of trade? "But Akil, what if I don't have a rule for this in my trading plan?" Well I'm sorry but you shouldn't be taking the trade then.
With structure being at the core of my trading philosophy I'd be looking for targets at resistance & stops below support. Best of luck if you do get involved and until next time. "Plan Your Trade, Trade Your Plan"
Well that escalated quickly....I can hear the trolls coming my way already
Elliott_Moore
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Ignore the clowns and move on.
Akil_Stokes
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Amen to that
moneymaking
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LOL :)
caifu642
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Akil, I certainly don't want to be labeled a "troll", but I do have a question about your thoughts on this trade. I'm an avid follower of the AUD and have been trading it with real money since 12/1/14. My question is more of a technical nature though. It seems in your chart that you're highlighting the divergence in the RSI versus the price action. First of all, am I understanding that correctly? Second, my view of a divergence in this type of case is when the price action creates a lower low while the RSI (or Stochastics) clearly do not do the same. What am I missing here?
And thanks for all of the work and effort you put into this. I've learned a good deal from you and will continue to do so! Have a great weekend!
Akil_Stokes
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Don't worry you're not a troll, there's a big difference between those who as question and those who only look to throw salt in the wounds. To answer you question, when i look at divergence it has to do with what the indicator is showing (in this case the RSI) in comparison with what price action is showing. The type of divergence in this trade isn't the regular divergence that you mentioned above. It's called "Hidden Divergence" and it's used for trend continuation trades, unlike the normal divergence which is used to predict reversals. I hope that made sense but here's an example of the difference google.com/search?q=hidden+divergence&biw=1366&bih=667&source=lnms&tbm=isch&sa=X&ei=rlhfVZHXMo2uyATLm4PwAg&sqi=2&ved=0CAcQ_AUoAg
Akil_Stokes
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I hope that response was clear, if not just let me know and I'll try again
caifu642
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Thanks Akil. The answer is clear, but I'm just not familiar with he hidden divergence concept. I'll take a look at your reference over the weekend (thanks for attaching it!). As for the movement, I think the AUD was at a potential turning point, but the market seems anxious for the US to raise interest rates. The CPI announcement this morning had the USD back on the rise. Not sure that is warranted as it will be tough for the US to raise interest rates, but I'm short the AUD so I'll happily take it! Thanks again!
moneymaking
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As you said earlier Akil, loses are good because we know a winner is right around the corner. We just have to stay confident in our strategy and be willing to pull the trigger when the next opportunity arrives.
Akil_Stokes
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Yup, each loss brings you that much closer to the next win