Trading the AUD: part three
In the final article of the series, Andrew Barnett discusses the reality of making money on the Aussie dollar.
How to put it all together is the key to trading the Aussie dollar successfully. You can have the charts, the fundamentals but it isn't ultimately about either of them that will see you make money. It's how you manage money long term as an Aussie dollar trader that will make the difference. Money management is your only salvation and if you don't get that from day one you will not make money.
Can you make money using charts? Yes, but the vast majority fail. Can you make money with fundamentals alone? Yes, so long as you know how to manage risk and understand the data announcements and how the market will likely react and form a sentiment. Can you realistically make money (a lot of money) using both? Absolutely, but only with solid money management.
Recently we've seen the Aussie dollar fall from $1.08 steadily down to again below parity (touch below parity again 14th May) and if you combine both the fundamental lessons I have provided and the technical correction signals the Aussie dollar was showing, for me to continue to call the Aussie lower as I have done for six months now is not rocket science.
Price Action Analysis
With Ichimoku Kinko Hyo..
Ichimoku Kinko Hyo price action analysis can be used to determine future support and resistance of any asset class, which are the key components of any technical analysis.
The distinct kumo "cloud" you see painted across Ichimoku charts is a forward looking indicator, with current prices painting the cloud 26 periods forward. Put another way, today's kumo cloud was painted by prices 26 periods ago. This mechanism allows the indicator to display future support and resistance, a very useful function for traders. We will see this in play in a bit.
This article analyses the daily EURUSD chart using the Ichimoku lens.Read More