AUDUSD on 17 Nov 2009

Step 1: Establish Daily Bias : DOWN

Daily chart

Although price is above 10sma and 40sma, my bias for the day is short for the following reasons:

1. AO turned red
2. RSI divergence
3. AO divergence
4. Stochastich histogram made a lower bar than the previous

Although we are expecting a retracement, the overall trend is still UP. Therefore, shorting this pair must be taken with care having a small Stop loss and conservative Target Profit

Step 2: Entry Signal

1 Hour

Entry Signal was achieved for the following reason:

1. 6sma cross 23 sma down
2. Parabolic SAR above
3. Trendline was broken
4. We now wait for price to go near the 6sma or 23sma before looking for an entry trigger
   

Step 3: Entry Trigger

5 min

After the 6/23sma cross and price starts to approach the 6sma and 23sma we now look for a trigger. Trigger is met based on the following conditions:

1. Price retraced to 38% fibonacci retracement level
2. A bearish engulfing pattern is form
3. A new Parabolic SAR is form on the top
4. Stochastics crossed and starts moving out of the overbought zone.

Entry: 0.9342
SL: 0.9362 (20 pips)
TP: 0.9282 (60 pips)

Results: +57 pips (60pips-3pips spread)