This is how I analyze the market (and AUDUSD trading plan)

If you’ve been reading my blog for a while you know how much I like to have trading plans…

And by trading plans I mean a clear picture of what the market needs to do, to make me open my trades.

You have no idea of simple it is to trade, once you have a clear trading plan…

Anyway… here is my plan for the AUDUSD

Let me show you first my long term chart:

Here we have three possible scenarios:

• Scenario 1: The market stays forever around that level – not likely
• Scenario 2: The market breaks the resistance level – likely
• Scenario 3: The market gets rejected from the resistance level – likely

So we now have two likely scenarios, how do I know which one is likely to play out?

I don’t know… but let me tell you something (this is probably the best trading advice you are going to find out there): YOU DON’T NEED TO KNOW.

Just follow the market (with the help of a trading plan)

Here is my short term chart:

We don’t need to know what is more likely to happens because we are going to follow the market, and forget about “guessing”.

So here is my plan:

If the AUDUSD breaks the upper green resistance level, I’ll know that Scenario 2 is likely to play out, and I’ll look only for long opportunities.

If the AUDUSD breaks the lower green support level, I’ll know that Scenario 3 is likely to play our, then I’ll look only for short opportunities.

Isn’t it better to just follow the market with a trading plan instead of trying to guess where it is heading? What are your thoughts?

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