Aussie (AUDUSD) 230816

How to trade this plan
1. Support and resistance zones shown in green and pink with arrows indicating direction. Bulls buy at support and bears sell at resistance.
2. Keep in mind that when price breaks through support the level will be tested in future as resistance – this is called role reversal.
3. Market direction indicated by 21 and 55. Take note of where the 21 is in relation to the 55 and where price is in relation to the 21. Also take note of the width between the two moving averages. If price is below the 21 you may consider looking for selling opportunities. If the 21 is dynamic resistance then if price falls from the 21 it predicts a lower low – the opposite applies when the 21 is dynamic support. If the 55 is dynamic resistance then if price falls from the 55 it predicts a double bottom – the opposite applies when the 55 is dynamic support.
4. Direction of price is indicated by 5 and 8 MA’s and stochastic cycles. Remember that when you line up higher and lower time frames, price is going in the same direction. The goal is to line up market and price while using support and resistance as your leading indicator.
5. Pay attention to reversal patterns on higher time frames when in a trending market – a reversal pattern could mean the end of a trend. Keep in mind that a reversal pattern that is not at support or resistance is meaningless.
6. Pay attention to reversal patterns on lower time frames when confirming your entry and if you want additional confirmation wait for a 5 8 cross on M5 or M1 before entering your trade. Remember – we enter on the second chance on the 5 minute chart.
7. I have added a summary under the H1 chart indicating observations and trade plan.

Note:
a. Please read Kate’s post on Forex Major Currencies Outlook everyday so you are up to date with the latest news. Here is today’s post: Forex Major Currencies Outlook (Aug 23, 2016)
b. Please be aware of risk events for the day by using the Forex.Today calendar.
c. Watch Wayne’s webinar daily at 13:30 SAST or catch the recording on the Forex.Today Youtube Channel

AUDUSD Daily

AUDUSD H4

AUDUSD H1

Bulls bought off of MM2 at the start of the month though price has failed to make a higher high above MR1. We are seeing lower highs and lower lows on the H4 chart and are currently at resistance. If was I was going to buy then I would wait for a break of resistance and a higher high and then look to enter a trade on the pull back that confirms resistance as support. If I see price falling at resistance then I will jump into a lower time frame and wait for confirmation before entering a short trade. The confirmation I am looking for is a lower low and my plan would be to sell at the lower high. I would use previous support for resistance or look to sell in the fib zone (between 38.2 and 61.8).