Aussie Fade
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This setup is designed to play the longer-term range in AUD/USD that’s been showing over the past ~ year (shown below):
Chart prepared by James Stanley
On the shorter-term setup, price action has just recently run-in to this zone of resistance, finding sellers last week on the first re-approach about .7725. Prices have tested that level again this morning, but of recent buyer motivation appears to be waning, as can be seen via RSI divergence on Daily chart below:
Chart prepared by James Stanley
This can allow for stops to be set atop the range at approximately .7870 to take on approximately ~150 pips of risk. This could allow for an initial target at .7565 to get a better than one-to-one risk-reward ratio. If this level comes in-play, stops can be adjusted to breakeven as deeper targets are sought at .7450, .7325 and finally to .7250 in order to clear out the majority of the position before that confluent support level at .7200 comes back into-play.
Chart prepared by James Stanley
--- Written by James Stanley, Analyst for DailyFX.com
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