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:
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:
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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