UPDATE: ANALYSIS: AUDUSD: A Bottom? A Low Risk Entry Tutorial

FX:AUDUSD   Australian Dollar / U.S. Dollar
In my last post here, I posted an analysis on this pair in which i suggested that it is possible that this pair is about to turnaround and take off to the upside for a large wave (c) move. Here is that post:

The purpose of this post is not to provide any possible trade call although a good trade based off this tutorial is possible. The reason I am making this post is to hopefully give you, the reader, a lesson on how to take a low-risk trade and proper trade entry. I think many traders do not know how to do that and really have no idea how to structure a proper entry. Rather, they enter a trade on "feeling". And we know that trading on emotions is highly unreliable. So here, I will give you one kind of low-risk trade entry technique that I use on a regular basis with regular success.

In my previous analysis post, I'm suggesting that we could be looking at a lasting bottom in this pair after an extended and rather strong downtrend. Prices have put in a low at 0.69269 on Jan. 10th. Since that low, prices have bounced up. But is this a temporary pullback or is that low a lasting low? We have no way of knowing for sure. So how to play this pair? If you buy now, then you are betting that the low will hold. If you sell now, then you are going with the trend and thinking prices will continue on down. Which way to go? Well, in my post, I'm looking at the possibility that it could be a lasting low and we are going to be seeing an uptrend starting. If that is what I believe, then I want to go LONG. Since there is no guarantee that it won't just continue down and I will get stopped out for a loss while trying to "catch a falling knife", I want to minimize my risk exposure.

So here is what I would do:
1. First, I of course go down to a lower TF to see the price action more clearly. In this case, I go down to the 1HR TF which is the lowest TF I personally use.
2. Second, I locate the low and the most recent high point put in by the bounce and pull a fib from low to high to get the retracement levels of this recent bounce.
3. I locate the "G-Zone" of the fibs and see how they line up with any structure. Obviously, the low point is a structure. But locate any structure based on the TF you are looking at.
4. Find an AB=CD if there is one.
5. See where that AB=CD completes. If it completes at or near to a G-Zone fib level, that is the fib level I'll be targeting
6. Find a Bat or a Gartley pattern that may "fit" the trade. Normally, you'll find one.

Watch for prices to descend down to that targeted fib level for an entry.

So that is basically how I target an entry in this kind of situation. If done right, the entry is EXTREMELY low risk. BUt mind you, you are still counter-trading against a trend so don't expect miracles! If you get it right, then the potential rewards far outweigh the risk!
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Could be a bottom, worth a trade imo, tnx 4 sharing
+1 Reply
Excellent!! Very helpful. Thank you! I always say: "you're the best" (Akil is the "second best") :) (just kidding).
thanks for sharing!!!
I like the way you trade. Thx for sharing
Hi EF. Always great to see your insights using EW and harmonic patterns. What do you think about my chart analysis, which differs from your chart in wave count after the X wave. I see the current downward impulse as the wave 1 of the final wave v. Present PA is in corrective mode of wave 1 to form the wave 2 that may go upto 61.8 entrancement levels at 0.7178.

+1 Reply
thanks for sharing
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Please keep in mind that I am not giving any trading signals or trade calls here. Only providing my own trade thoughts for your benefit and insight as to my trading technique and style. Please don't ask if you should or should not take the trade or ask for stop loss and take profit levels. Any SL or TP given on my trades are my own I have used for my trade and are not recommendations for you to use. If you are not sure, then you do not have a trading plan for yourself in place. I suggest you make one before you continue to do any trading!

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TTCSteve EverythingForex
thanks for the heads up EF, I had my entry at 69.35 so bumped it up to yours and got filled perfectly, when I otherwise would have missed it. Time will tell whether it works or not but thanks in any case. BTW, in EW terms, I have this low as wave b of ii with this potentially starting c of ii beofre down in iii of 5 of X with 66.20-65.70 target.
You're welcome, Steve.
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