The AUD set up nicely during the Asian session for a short in the UK session.  There was very little news to be concerned about until the US economic news releases.  This is one of my favourite setups.  Had price moved down all the way to the Asian session low, than it would have been one of my favourite results too.

My students often comment that I give too many tips away in the blog.  Having said that...here I go again.  Currency pairs have a tendency to move a certain amount in a given day.  Once they have moved this amount, the probability of them exceeding it further, dwindles rapidly.  Can a pair move 20 or 30 pips above what it normally does on a given day...yes absolutely.  Is it likely to...no.  Currency trading is not an exact science, but probability and statistics are very applicable.  On very exceptional days, a pair may double its usual range and we see this now and then.  It's not the norm though.

The AUD exceeded its range during the Asian session by approximately 20 pips.  Think about it...how are the UK traders going to make money on the AUD, if it has already exceeded its range?  The answer is... they will likely reverse it and push it the other direction.

We see a quick rejection of a break above the Asian session high which affords us a very reasonable stop.  My intention is to aim for 3 pips for every pip that I'm willing to risk.  In this case, it's a risk of 17 pips to get 79 pips.  As the trade progresses, I expect yesterday's high to be tested and retested before a further descent toward the Asian session low.  Instead of a complete reversal to the Asian session low, we end up in the middle of the range in this case...which is not usual, but it often will go the full distance.

Keep your eyes open for this kind of trade setup.

Good luck with your trades!

Back tomorrow.

Michael  www.privateforexcoaching.com