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AUD/USD: Ascending Channel Support (October 29, 2013)
On its 4-hour time frame, AUD/USD’s highs and lows can be connected to form an ascending channel. This shows that the pair’s uptrend is still intact, provided that the bottom of the channel holds as support for now.
Stochastic is already in deep in the oversold region, suggesting that selling pressure is already exhausted and that a bounce will take place soon. If that’s the case, the pair could climb back to the top of the channel at .9750 to .9800 or at least until the middle around .9650 to .9700.
A downside break, on the other hand, could last until the area of interest around .9300. If you’re bullish on this pair though, you could go long at market and set a tight stop below the channel support to get out of the trade as soon as the bottom breaks.
Going long at market or .9550 until .9750 with a 100-pip stop would be a 2-to-1 return on risk. Moving your stop to entry around the middle of the channel is a good way to manage risk and protect profits.
By Kate Curtis from Trader's Way
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