Hey guys, today i want to share this top down analysis on AUDUSD. As you know, i start my trading analysis on higher timeframe (to get a bigger perspective), and then i enter the market in lower timeframe. On the daily chart we recently exited a OVERBOUGHT condition on RSI, that's indicative of an overextended market, near to a Cypher completion. So the bigger picture tells me this may be the starting point of a reversal; therefore i go on lower timeframe (4h) and i see a double top (with RSI divergence) with a break of structure to the downside, and that's another clue in the direction i've chosen on the daily. I could have used 2618 strategy to sell the market at the 618 retracement but in order to have a closer look, i lowered another timeframe; finally we're here. On the 1h chart, as you can see, i spotted a Bat formation completing near to the 618 level. So i've decided to use the Bat completion point as a better entry for a 2618 trade, therefore with stops above the double top and target1 at the retest of the lows. This way i can have almost a 2:1 RR on the first target and possibly a 4:1 RR on the second target. Hope you understand the process that brought me to this decision.
If you have any question, feel free to ask beneath, Otherwise, see you in the next chart!
Why did you cancel this order? Because the price extended C leg?
Roker1
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Hey @ianchris, due do the new C leg, the pattern should now be considered as a butterfly (for my rules), but i don't trade those.
Roker1
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Hey @ianchris, my mindset is still to short this pair, i simply have to find another reason for entry. Hope it helps.
Telson
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Thank you @Roker1 for sharing, you may also wanna have a look at this:
Wishing you all the best
Roker1
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Hey @Telson, actually i mentioned this Cypher pattern on the description above (when i was referring to the daily outlook). Anyway i always appreciate your thoughts. All the best!