Usually when I trade I look for 3 main drivers to ‘Position trade.
1st- Fibonacci analysis both retracements and Extensions (ABC)
2nd- Correlation from both a Inverse standpoint and a direct standpoint. Inverse has to be strong and vise versa.
3rd. Headline risk or increase vol risk.
So far 2/3 of my entry criteria for a ‘position’ trade has been activated. .
1st Fibonacci on AUD/USD has been testing various key 61.8% 78.6% points for days and now it’s starting to take shape to the downside only one more 61.8% close below would cement the Fib side. Below is the chart of current AUD/USD the Yellow (61.8%) is from Last Year Hi/Lo of 1.1079/0.9386. The Red 78.6% is from the 6/1 bottom to the Last hi set 9/14 we have also trade below and close below this 78.6% The Last hurdle on the Fib side to overcome is the BLUE 61.8%. This blue 61.8% is YTD HI/LO 1.0855/0.9581 the moment we close below maybe even trade through is when I will pile in on shorts for what is now looking like an ABC. On ABC extensions if this is a true one 78.6/88.6/1272 come in at 1.0272/1.0230/1.0056
2nd. Correlation I have stated before I watch dollar index constantly for better signal on AUD/USD or /6A entry and ES (S&P) to show a confirmed move. Dollar Index was trading in this range of 78.6%/88.6% or (78.81/79.43) YTD Hi/Lo since the sell off and on daily it broke out above 78.6% on 9/20. Since 9/20 dollar index never closed below 79.431 and it has acted as new support. We could trade to 61.8% on dollar which is 80.46 but of course 80 needs to be test first. On S&P we finally saw a fill of Ben’s QE3 spike set 9/13 so this could see some more pressure unless this is just purging for a few days before a move higher.
3rd. Headline Risk/Volatility Implied vol’s on AU options has picked up these last two weeks and it looks more primed for an October cut. However I am not in the October cut camp looking at November myself but if we do get a cut in October this will send AUD/USD to 1.0165 very quickly possibly within a 24hr period from where we are trading at the day of. Spain is going to request a formal bailout but we need them to act crazy and act as if they don’t need it before they come out. Headline risk is going to pick up and it will be focused on Spain/ RBA minutes
1st- Fibonacci analysis both retracements and Extensions (ABC)
2nd- Correlation from both a Inverse standpoint and a direct standpoint. Inverse has to be strong and vise versa.
3rd. Headline risk or increase vol risk.
So far 2/3 of my entry criteria for a ‘position’ trade has been activated. .
1st Fibonacci on AUD/USD has been testing various key 61.8% 78.6% points for days and now it’s starting to take shape to the downside only one more 61.8% close below would cement the Fib side. Below is the chart of current AUD/USD the Yellow (61.8%) is from Last Year Hi/Lo of 1.1079/0.9386. The Red 78.6% is from the 6/1 bottom to the Last hi set 9/14 we have also trade below and close below this 78.6% The Last hurdle on the Fib side to overcome is the BLUE 61.8%. This blue 61.8% is YTD HI/LO 1.0855/0.9581 the moment we close below maybe even trade through is when I will pile in on shorts for what is now looking like an ABC. On ABC extensions if this is a true one 78.6/88.6/1272 come in at 1.0272/1.0230/1.0056
2nd. Correlation I have stated before I watch dollar index constantly for better signal on AUD/USD or /6A entry and ES (S&P) to show a confirmed move. Dollar Index was trading in this range of 78.6%/88.6% or (78.81/79.43) YTD Hi/Lo since the sell off and on daily it broke out above 78.6% on 9/20. Since 9/20 dollar index never closed below 79.431 and it has acted as new support. We could trade to 61.8% on dollar which is 80.46 but of course 80 needs to be test first. On S&P we finally saw a fill of Ben’s QE3 spike set 9/13 so this could see some more pressure unless this is just purging for a few days before a move higher.
3rd. Headline Risk/Volatility Implied vol’s on AU options has picked up these last two weeks and it looks more primed for an October cut. However I am not in the October cut camp looking at November myself but if we do get a cut in October this will send AUD/USD to 1.0165 very quickly possibly within a 24hr period from where we are trading at the day of. Spain is going to request a formal bailout but we need them to act crazy and act as if they don’t need it before they come out. Headline risk is going to pick up and it will be focused on Spain/ RBA minutes
Attached Image(s) (click to enlarge)
I'm too lazy this morning to post chart. Have taken a bit of audcad, but the most interesting is audnzd, but this night the spread was more than 8pips, so it dissuaded me.
