This month's ProAct Traders “Pay Your Mortgage Trade” idea is found in the AUDUSD pair. Both Elkana and I have the same currency pair but with a slightly differing view, so we will see which one plays out.

Scott

When looking at this pair on a 240 min chart you'll notice that we are in a nice trending move to the downside. The nice thing about this setup is that it has two great trading scenarios depending on your view and both Elkana and I represent those two views. I am waiting for the finish of the correction to finish the 4^th wave and then a 5^th wave to the downside. After the correction at the top it has 570 Pips down to the S7.

Elkana

AUDUSD has created a 2 set of 5 waves. First set in red whilst second set in orange. The first set of waves shows the 3^rd wave to be shorter than the 5^th wave. Elliot Wave Theory rule says that the 3^rd wave cannot be the shortest one however remember that it’s a theory more than a concrete rule! In the 2^nd set of 5 waves the Aussie created a reversal pattern called falling wedge (it can be viewed better on the daily time frame) whilst the MACD was showing also divergence on this pair meaning a reversal was due to come!

I have then marked in bright green a new set of corrective waves. The MACD shows a start of divergence however not yet a pattern has been formed to confirm an imminent reversal. MACD shows 2 types of divergence (corrective or reversal) and is the job of the analyst to figure out which one of the two it is. At present we have a corrective divergence.

Where is then the opportunity? If a bounce occurs at 0.7230/7200 area and the sideway (marked in red) moves will continue then I will expect a further continuation as a buy to complete the “C” corrective wave or 3^rd wave (at present is too early to make bids on whether is the “C” or 3^rd wave) with target at around the 240 min trend wall.

If instead the sideway moves is negated and the price breaks the 0.7150/40 area I will see the sell move as the 1^st wave for new set of waves to the downside.

Our trading methodology is based on proprietary technical indicators. We pay attention to what the big banks are doing in the markets (the Big Boys) and specifically look for opportunities that have a high opportunity and low risk. We always identify our target before entering a trade, and we focus on the risk of the trade instead of the reward. We have (and follow) rules, and we press our winning trades without exception.

Remember that we recommend that you always trade with stops. And if you don't trust yourself or think you'll get cold feet in a long trade like this, then place the trade and walk away. Better to get taken out by a stop or target than to second guess an active trade and take yourself out. Do your research before you place your own trade. Trust your research.

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