Do you go with the flow? Or would you rather try to profit from an eventual pullback?
Sometimes it’s difficult to trade when a currency pair is trading at historical lows/highs, why? Because we all think that sooner or later the market will retrace back and it could have us stopped out if we go with the flow. What do you do under these circumstances?
This is the case of the EURAUD, it has been reaching historical lows for a month now (almost daily). Here is the weekly chart:
If you asked me the same question I asked you at the beginning of the post, I would go with the flow: keep looking for trade opportunities in the direction of the trend. Yes, the market will have a pullback, but we don’t know when, it could be tomorrow or it could be next month.
In the EURAUD case, I’ll keep looking for short opportunities without a doubt. Since we don’t have further support levels I’ll use a 3:1 risk reward ratio as my take profit order.
Trade safe and have a great week ahead!