AUD/USD Analysis

I always say that trading is simple, but not easy. The concept is straight forward, buy at one price and sell at a higher price so why is it not simple? Well, the human element often gets in the way with our minds often trying to out think any given price move. The psychological battles of dealing with loss aversion and banking winning trades too soon are a constant struggle for many until their experience grows.

Even then, we have to still suppress that basic human fight or flight instinct that is hard wired into our DNA. So our job as traders is to try and make trading as simple as possible. That’s not always easy when there are literally hundreds of different price patterns, candle patterns, cloud patterns, trendline patterns and indicators to choose between. But if we can simplify our trading, it makes decision making easier and that then helps us to stick to our trading plans.

I was away skiing last week and although it’s a holiday, I still keep my eye on the markets periodically. What I always find interesting when I’m away is all I look at are the market prices on my phone application and a raw price chart. Despite not having all the information available that I would normally use, I still find myself able to get a read of the price action and have a couple of profitable swing trades whilst on the slopes. So, keeping it simple does in fact make it easier, we just sometimes need to take a step back in order to gain clarity…

This week, we’ll take a quick look at the weekly, monthly and daily charts of AUD/USD. The monthly chart shows price is below but still trading close to the trendline that started in 2001. Price has traded around this line now for 5 months so is it going to properly break down or not?

Then looking at the weekly chart there’s an MACD divergence which would normally be a bullish sign so combined we have a long term trend line that price is still hovering around plus that divergence so if price can rally some more back above the 50 day moving average, I would then start looking for swing long plays…

Charlie Burton

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