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AUDUSD: H4T with yet another BM

After my previous blog post on Best Practice: BM on AUDUSD, AUDUSD did another BM. Let’s see how we can take advantage of this clear trending pair.

On the Overview

Big Picture view of AUDUSD on the Monthly charts

Big Picture view of AUDUSD on the Monthly charts

  • On the higher time frame, we can see that price is currently at resistance. So does that mean we’re going to short?
  • No, don’t forget our timeframe for reference is always on the H4. So let’s see what H4 looks like.

Closer look at the H4 time frame

H4 chart plots a clear trend, strategy and pattern

H4 chart plots a clear trend, strategy and pattern

  • Week to week it is very clear that price is heading up with 2 previous bullish expansions fitting a big move criteria.
  • At the moment, we can see a familiar 1234 pattern forming.
  • We are now missing a potential point 4 which we can predict using Fib-R of the flow as well as previous boxes highs and lows.

Looking for trade zone for point 4

(Note: we do not trade at the trade zone. We only enter upon a trigger)

Possible Support as seen on the D1 charts

Possible Support as seen on the D1 charts

  • Plotting some lines at where price confluences with previous boxes highs/lows with Fib-R levels.

Going back to the H4 charts

Possible Trade Zone in H4 charts of AUDUSD

Possible Trade Zone in H4 charts of AUDUSD

  • Another tool which can be used to predict is the equidistant channel.
  • Again, I emphasize that we do not trade at the trade zone. Instead the trade zone is where we expect point 4 will form.
  • With point 4 forming at these support levels it will fit into our criteria of a good point 4.
    • Support of previous Boxes High/Low
    • Fib-R Level
    • Higher Time Frame Support and Resistance
    • Equidistant Channel
  • Beyond this, you can also do a final check with the Bollinger Bands and OsMa.

(Update 21 Apr 2014 by Jerome)

Using Bollinger Bands and OsMA as checks

Using Bollinger Bands and OsMA as checks

  • Think of Bollinger Bands as a rubber band; at the outer edges, price tends to snap back.
    • Looking at Price now, it is closer to the oversold region (lower band) so chances are higher that it will head up rather than down.
  • Based on OsMa, plotting a trendline on point 2 and point 4. (In this example, I’m using the latest 2 turning points)
    • We can see a Bullish divergence forming. This also points to a higher probability that price is heading up.
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6 thoughts on “AUDUSD: H4T with yet another BM”

  1. Steven Lim says:

    How do i check with osma indicator?

    1. Jerome Lee says:

      Hi Steven,

      Updated the charts with how to use OsMA as well as Bollinger Bands

  2. Desmond Zhi Wei Goh says:

    Thanks Jerome for update w BB & OsMA

  3. Steven Lim says:

    thanks…

  4. Ting Ping Lim says:

    13TL break is considered invalid?

    1. Jerome Lee says:

      Hi Ting Ping,

      Yes, the 13TL was invalidated as price closed back below. I’m still looking at this from a bullish bias however and waiting to see if price can close above previous week low as a form of WR.

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