Trade Update: AUDUSD long and USDCAD short

Unfortunately, I was a bit too late to take advantage of the setup on the EURUSD pair. This pair retraced nicely along a resistance turned support zone and held up for a further bullish rally.

Here is is the chart setup in question:

 

EURUSD 1-Hour

Over on the hourly chart, you can see that it is holding up quite nicely. In my earlier post, I did say this pair would be kept on the back burner and wouldn’t be one I would actively be monitoring.

Let’s move onto the two trades that I am currently:

USDCAD 4-Hour

The USDCAD short position is currently in the money as the 4-hour support turned resistance level is holding up nicely. I marked the next major point of support in this down-trend at the 1.3440~ level. This was a resistance turned support that held up quite a while ago so we will once again determine if it holds any strength. There is currently another 50 pips to go in order to hit that level.

AUDUSD 4-Hour

Meanwhile, I took a long position on this pair after consideration that the resistance level simply isn’t going to hold up. Although initially I was bearish, but the strong break-out through the resistance zone was the first indication that this is a bullish move.

The second indication is the correlation of the USDCAD and AUDUSD pair. I was initially bearish on the AUDUSD pair, but I had already shorted the USDCAD pair. It only makes sense to take on a short position if both pairs share a strong positive correlation. This proves not to be the case.

Here is the daily correlation:

Key takeaway is that they are expected to have a strong inverse movement/relationship.

The inverse relationship is even stronger on the time-frame that we are currently trading on, hence leading to the AUDUSD long entry.

Currently, I don’t have trade exit plans since both trades are still to what I consider to be in the initial moves. My targets will be mostly be to tighten stop losses as these trades approach the nearest relative highs or lows.

 

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