AUD trade looked good overnight as did the CAD. The AUD moved up as the UK session got underway and abruptly reversed. An entry is found on the second bearish candle – meeting our reward to risk ratio of 3:1. This is an extremely important first element to any trade! Then, once you can get the risk out of the trade altogether and lock in some profits – do so. When price consolidates or reaches support or resistance levels, move your stops down and keep moving them down to lock in more profits. The market can reverse in a blink, so always use a stop and always get the risk out of your trades as soon as possible by placing your stop loss/take profit just above/below structure.
The target levels that I use are extremely powerful and rarely will price exceed Target 2. After Target 2 is reached the market is much more likely to reverse, than it is to continue further past the target. The large institutions are using very similiar levels and hence the reversal. On rare days, Target 2 will be blown through, but this is usually event driven. I watch the candles for signs that the move is exhausted at such times, and always lock in the profits.
Let’s see how the week wraps up…
