AUD/USD Swing Trade Setup

We’ve had some pretty choppy marketing conditions over the last couple of weeks which makes swing trading a bit tougher, but as implied volatilities of currencies continues to calm a bit we’ve starting to see some interesting opportunities arise. Today we’re looking at AUD/USD which has been pretty much range bound since December, and with 1 week and 1 month implied volatility of 10.3% and 10.9% respectively (which is fairly low for this pair) we will likely see this sideways action continue. Last week during the nuclear crisis of Japan, we saw this pair push towards the bottom of the range and failed to break through the support level, and since then made a very large rally back near the top of it’s range. However, note on that on that last push up, we’ve see exhaustion and divergence on both CCI and RSI indicators. Due to this condition we would be inclined to take a short here. HOWEVER, remember just because something is overbought even with divergence, doesn’t mean this cannot stay overbought, so we prefer to keep our stops tight in case this move back higher to test 1.0200 high’s. I would recommend a short here at market with stops around 1.0150 and a target in the .9850 area. At this time of this post that represents a 3.5:1 risk/reward ratio. To hear and share more trade ideas and setups like this, join us for our Daily Chatroom moderated by Professional Traders. 8AM- 10:30 AM. Sign up here now offers the Weekly Swing Trade Analysis Chat Room every Tuesday from 8 – 9 pm ET. Register HERE.

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