AUDUSD, Daily Chart, 28/02/13 : Trade Setup

Forex-Trader

AUDUSD_DAILY_280213

Pair’s main trend which can clearly be seen on Monthly Chart, is UPWARDS, but on smaller time-frames pair seems to be moving in a Range and actually it does so in a whipsaw manner.  I like to trade on the DAILY Time-Frame because it cuts most of the noise off and gives me a better picture of a trade setup especially when it comes to calculating my Risk/Reward Ratio.  So here I noticed that pair was in a downward Corrective move which has just reversed and what made me believe so is the HAMMER Candlestick -marked in blue- which is validated by the Regular Bullish Divergence between the price action which goes to Lower Low and the Stochastics which go to Higher Low popping up from Oversold Zone (below 20).  My LONG ENTRY Point will either be @1.0245 or @ next candlestick’s open. My Stop-Loss a few pips below HAMMER’s tail @1.0175  and my Take-Profit can be placed at the Conservative point of  1.0598 in case price falls down and continues its Ranging Pattern. Odds are it may go up to  1.0621 or even continue way past that point reaching Fibonacci extension.  But I’d rather secure fewer profits, than lose my shirt :)  In this Trade Setup we risk 70pips and go -conservatively- for a profit of  353pips. That means our Risk/Reward Ratio is at 1:4 which is ABSOLUTELY SUPER for me!

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