My First Losing Trade

I went long on the AUDUSD shortly after I set up the EURJPY trade as there was such a strong break out of the resistance at 0.9297.

AUDUSD

Long: 0.9308

Stop Loss: 0.9286 (-22 pips)

Take Profit: 0.9360 (52 pips)

But after entering the trade, it continued to trade down and finally hit my Stop and exited.

So what went wrong?  Was I too enthusiastic to jump into this trade without doing enough analysis?  Let's take a closer look at this trade.

Ok, I decided to enter this trade around 2am when the price was already retracing from the peak move at 0.9328, after breaking through the resistance at 0.9297. I entered the trade at 0.9308 at 2:33am, which is in 3rd candlestick (Green) after the peak, just above the 1st Fibonacci retracement level.

Ok should I have entered this trade?  What were my indicators telling me?  As I entered on the 3rd candlestick after the peak, which is Green, I should be using the Indicators for the 2nd Red candlestick to confirm my trade.  Now MACD was sloping up so ok, but Slow Stochastics was at 92.30, indicating a super-overbought situation! And RSI was at 68.10, also indicating an almost overbought situation.  So 2 out of 3 indicators did not confirm my trade.

*sigh* should have been more diligent to ensure that all my key signals line up before pulling the trigger to enter this trade.

At the time of this writing, the AUDUSD has dropped to a low of 0.9209, breaking through a key trendline in Cyan that was drawn in the 3hr chart and approaching the 0.9201 support.

At this point the MACD is sloping down, the Slow Stochastic is at 6.6 and RSI is 34.

So 2 things can happen:

1.  The price breaks through the support and continues down.

2.  The price bounces off the support and trades up to test the 0.9297 resistance again.

What to do now?  Nothing... :)  I will need to see confirmation of either a breakthrough or a bounce off before the signs are clear for another trade.

Let's see how things pan out :)

Happy Trading!