Friday, April 05, 2013

(6A) Trade / Week of Mar 31 to Apr 6

The Aussie dollar (AUD) began staging a rally this week (that would ultimately fail), but it presented a short term trading opportunity to buy the futures for a quick trade.

AUD dollar declined but staged a mid-week rally off the 1.033 level.  On its way up, it formed a RALLY-BASE-RALLY pattern with an extremely strong follow through.

This is a high probability pattern that upon a retracement, we should get some type of a bounce.

This is exactly what happened when price entered back into the 1.045 zone.  The contract was purchased in the middle of the zone (stop at the lower end) and traded out to the first supply zone. The reward to risk ratio was between 2 and 3 to 1 depending on the target.

Price once entered, quickly rebounded.  The traded was protected with a stop at break even (entry price).

Price subsequently turned broke the demand zone on a retest of it. Before that happened, the trade triggered a trailing stop and was exited for a profit.

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