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Forex(AUD/USD) Falling Wedge And Double Bottom Pattern

(AUD/USD) Falling Wedge And Double Bottom Pattern


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Looking at trading a falling wedge and double bottom on AUD/USD today in the 4-hour chart.

My bias is still in fact, bearish. Prices are still moving lower and on the Daily chart, we see a nice gap where prices can still fall to the 0,668 price level. So, looking for longs right now is all very well and good, however, we have to be careful and make sure we have bullish confirmation of a reversal before we go jumping into the deep end and going long right away.

On the 4-hour chart, we have a falling wedge with price bouncing nicely in between the top and bottom of this wedge. Usually, we will see a breakout from a falling wedge, which will usually be to the upside.

We also have a possible double bottom inside of this falling wedge. I have highlighted the neckline in yellow. We would need to see the price strongly break out of the wedge and straight through the yellow neckline. We would need to see bullish volume accompany this move to help confirm that the bulls are back.

We have partial divergence on the MACD’s Histogram. This means that the sellers may weaken and the buyers may be getting ready to regain market control.

My concern is the large gap in the daily time frame. We still have space to fall. And, if we do fall further, we can then look for further short entries, using that previous daily support level as a target. However, no short setups currently present themselves, at least to me. I am patiently waiting to see if the price will break to the upside and reclaim that yellow line as support.

We have Bullish confluence all around: Falling Wedge, Double Bottom, Partial Divergence.

But, as much as we would like to try and convince ourselves that the price will indeed reverse from this point, the truth is, that on higher time frames, the price movement is still bearish. We are still making lower lows. So, let’s watch what happens today. Perhaps we will get a bullish breakout.  

See you on the next one.

The Vortex Trader

Prediction Analysis Overview Table

Analysis Overview InformationPrediction Analysis information
On what market is this position based (Forex, Stocks, Crypto, Indices, or Commodities)?Forex
What is the trading position identifier (Name and/or Symbol)?AUD/USD
Is this a Short or Long Position?Long
Would this be considered a Short Term, Medium Term, or Long Term trade?Medium Term
As a Short, Medium, or Long Term trade, which best describes the position (Scalping, Day Trading, Swing Trading, or Position Trading)?Swing Trading
What Time Frame chart is the position based on (1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, Daily, or Weekly chart)?4-Hour
Depending on the asset, how much do you expect it to move in price or percentage?From Entry to Target – 2%
What ratio of risk to reward is this trade/position? Choose your appropriate target(s)Approximately 3 to 1 Target 2 N/A Target 3 N/A
What were the technical analysis tools used? Tick the appropriate boxes;Chart PatternsIndicatorsPrice ActionSupport & ResistanceTrendlines
From the technical analysis tools and indicators provided, tick the appropriate boxes for the tools and indicators used to analyze the position;Ascending Triangle, ☐ Bollinger Bands, ☐ Candlesticks, ☐ Channel, ☐ Cup & Handle, ☐ Descending Triangle, ☒ Double Bottom, ☐ Double Top, ☐ EMA, ☐ Fibonacci Retracement, ☐ Flag, ☐ Head & Shoulders, ☐ MA, ☐ MACD, ☐ Order Blocks, ☐ Pennant, ☐ Rounding Top Or Bottom, ☐ RSI, ☐ Symmetrical Triangle, ☒ Volume, ☒ Wedge

Trading Prediction Success Probability Score

FSP ranks the probability of this trade a 5/10

  • Wait for the price to break to the upside out of the falling wedge
  • Watch for strong bullish volume
  • Use the neck line as a retrace zone
  • Price could reject neck line.
  • Price is still bearish on the daily time.
  • Should not assume price is reversing until shown bullish confirmation

Disclaimer: The FSP probability score is derived from adding and subtracting the positive and negative aspects of the position and is not a definitive sign of how the trade will play out. FSP is not in any way a financial advisor

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