AUD/USD Analysis on Multiple Time Frames
03/05/2010 12:01 am EST
Here is our reward and risk assessment for what appears to be an upcoming bullish swing in the AUD/USD currency pair.
The daily time frame shows a confluence of two swing projections and the 78.6% retracement level near the 92.0 area, and this has been established in recent posts as the target for the current intermediate-term rally. We are now in a second swing that started at 0.88.
The four-hour time frame shows a short-term retracement, so far to the 38.6% level. The next support if this breaks is the 0.8940 area, which is the 50% retracement. We will also see that this is a swing projection of the first leg of the current decline.
The screenshot below shows the reward and risk assessment for two scenarios. The first is that the current retracement decline continues to the 0.8940 area. Then, if a bullish signal closes near 0.8960, we have a reward-to-risk ratio of 2.66:1 (assuming the target is 92.00 and stop loss is calculated by 3ATR below power line).
If, however, the market does not decline further, and is supported above the 0.8970 (38.6% retracement) level, the reward-to-risk ratio is 2.11:1.
By the Staff at Capital Market Services, L.L.C.