The following is the AUZDNZD daily chart as of Nov. 28, 2009. I am seeing two very good short trade opporunities for this currency pair.
1) MACD Divergence
2) Trend Line Break out
1) MACD Divergence:
If you want to know about the MACD divergence you can check it at http://www.forexbees.com/content/macd-divergence-trading-very-powerful-forex-trading-technique. If you observe the following graph which is a AUDNZD daily graph you can clearly see that AUDNZD is forming a divergence in the daily chart. The daily chart is showing higher highs but MACD is showing the lower highs. So there is a very good possible short trade opportunity here. There are many ways to take this short trade.
- Candlestick Formations: If a strong reverse candlesick formations are formed like the doji or a bearish engulfing candlesticks etc, this is one entry for a short trade.
- Commodity Channel Index: Currently the commodity channel index is above the 100 line. When it crosses below the 100 line this is one entry for a short trade.
- Stochastic Oscillator: Stochastic oscillator is currently above the 80 line. When it crosses below the 80 line this is one entry for a short trade.
- MACD moving average line: When the MACD moving average leaves the histogram bars that is one opportunity for entering a short trade.
Whichever happens first in the above short trade entries, I will enter a short trade.
2) Trend Line Break out:
If you observe the AUDNZD daily chart, it clearly tells you that it is moving on a trend line. When the chart is coming down and crosses the trend line with a strong bearish candlestick that is a perfect siganl for another short trade. When the trend line is broken with a strong bearish candlestick I will enter a short trade. It may take some days as currency the chart is away from the trend line.
For each of the above two opportunities I would like to enter them with two short trades each. For MACD divergence I will enter two short trades and for trend line break out I will enter two short trades. Whenever I get little proft I will close one and leave the other by moving the stop loss below the entry point. Check the following picture.
Click on the picture below to maximize it.
AUDNZD daily chart showing two possible trading opportunities
As explained in my above post, today the AUDNZD currency in daily chart is coming down. Moreover the CCI is trying to cross below the 100 line and the stochastics oscillator is also trying to cross below the 80 line. So I entered two short trades. One trade I will close whenever I get in to some profits like when it reaches the trend line and for the other I will leave it by moving the stop loss below my entry.
If the currency pair also crosses the trend line with a strong bearish candle stick then I will enter two more short trades. Check the following picture.
Click on the picture to maximize it.
I have entered two short trades for AUDNZD when it formed divergence. The following is the current daily graph. I have entered the short trades eventhough a perfect bearish candlestick is not formed. But today it formed a very good bearish candlestick. So I am good. Currency I am in 20 pips loss but the following things have already formed I in a good position I think. It will still come down.
1) Bearish candlestick formed.
2) CCI has crossed below the 100 line.
3) Stochastics has crossed below the 80 line.
4) In the MACD diagram, the moving average is almost leaving the MACD histogram bars.
Check the following picture. Click on the picture to enlarge it.