Trade of the Month: March #2 Short AUD/USD

It's not that often that you have a trade that is totally giftwrapped for you. The kind of trade with big blinking lights on it screaming "HEY! Over here buddy, FREE MONEY." This was one such trade. Not only was I able to get a high probability, low risk entry, but I was able to scale in safely several times as the trade progressed. Not only that, but between my first short trade and my last trade to cover, I captured over 90% of the pips from the move.

The Setup:
AUD/USD had been in a downward trend downward trend channel for nearly a month, moving reliably from top to bottom, with consistent intersections and subsequent rejects of price by the channel boundaries. Since the overall trend was down, I waited for price to hit the upper boundary so I could go short.

AUD/USD Bearish Channel

The Trade:
During this trade I was using the Amazing Crossover System to generate entries. Ordinarily I wait for the 5 Period EMA to cross over the 10 Period EMA but I will sometimes enter early if their are a confluence of factors supporting my entry direction and timing. In this case there were several factors favoring a price reversal to the short side:

1. Price had effectively stalled at the trendline, just as it had before
2. RSI was coming from overbought territory and moving toward the center line
3. My MACD Indicator (which I use to generate early signals) had already crossed over
4. The price bar right before my first entry was a Shooting Star pattern, a sign of bearish reversal.

1 hr chart for AUD/USD showing entries and exits

My analysis turned out to be correct and I was rewarded with a steady downward move. There was only a single green candle in the entire 30 hour move, and I was able to safely add to my position a total of six times. You almost never get such clean, gentle price moves, and when you do it pays to take full advantage. I close all my positions in the bottom 1/3rd of the range for the move, and locked up a tidy profit.