This is how I analyze the market (and AUDUSD trading plan)

If you’ve been reading my blog for a while you know how much I like to have trading plans…

And by trading plans I mean a clear picture of what the market needs to do, to make me open my trades.

You have no idea of simple it is to trade, once you have a clear trading plan…

Anyway… here is my plan for the AUDUSD

Let me show you first my long term chart:

AUDUSD

Here we have three possible scenarios:

  • Scenario 1: The market stays forever around that level – not likely
  • Scenario 2: The market breaks the resistance level – likely
  • Scenario 3: The market gets rejected from the resistance level – likely

So we now have two likely scenarios, how do I know which one is likely to play out?

I don’t know… but let me tell you something (this is probably the best trading advice you are going to find out there): YOU DON’T NEED TO KNOW.

Just follow the market (with the help of a trading plan)

Here is my short term chart:

AUDUSD

We don’t need to know what is more likely to happens because we are going to follow the market, and forget about “guessing”.

So here is my plan:

If the AUDUSD breaks the upper green resistance level, I’ll know that Scenario 2 is likely to play out, and I’ll look only for long opportunities.

If the AUDUSD breaks the lower green support level, I’ll know that Scenario 3 is likely to play our, then I’ll look only for short opportunities.

Isn’t it better to just follow the market with a trading plan instead of trying to guess where it is heading? What are your thoughts?

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Raul Lopez

I've been trading the markets for more than 15 years. I believe the best way to trade is by adapting to the market conditions. You can learn it too, join our community .

  • In the case of overcoming 0.9890, the pair can keep going to the level at 0.9910, 0.9960 (61.8% of fibo-extension for the drop from 1.0055 to 0.9813) and higher to the parity level.

  • gracien

    Many thanks for the EURUSD breakout which took place today.  You made me to be conscious of it and I was monitoring it.  I equally expect a breakout in the AUDUSD from the upside and the pair has a clear cut trending pattern.  But it appears breakouts is a seasonal event?  What is your take on what has been happening in the last three trading days?  Orah Tony

    • Raul Lopez

      Hey Gracien,

      Pure technical analysis Gracien… all information available (including seasonal events) are reflected in price itself… 

      Cheers,

  • Eviano

    which time period do you use to analyse  the market?

    • Raul Lopez

      Hey Eviano,

      To analyze the market I mostly use the daily and 4H charts… and take my trades off the 15M, 30M and 1H charts… Cheers

      • Eviano

        thank you. i mostly use daily then trade with 1 hour and 30minutes.