One of the surprisingly difficult parts of trading is taking ALL the trades your plan finds - not just the ones you like. This can be tough, especially where a trading plan is based on purely fundamental or technical factors. AUD/USD traders are facing this dilemma right now.
There's a consensus that AUD/USD is going lower. A stronger US economy facing potential interest rate rises drives a strengthening USD, and a slowing Australian economy and lower commodity prices should add further weight to the pair. Estimates vary, but the bulk of targets appear to be somewhere between 0.60 and 0.66.
Yet the chart is pointing in the opposite direction:
The break through 0.7280 confirmed the double bottom formation, although the immediate slip below rattled some bull cages and gave comfort to the bears. However, overnight AUD/USD rocketed back up through the first major resistance level. While the picture is now positive, a move up through 0.7440 (second resistance) would signal a clear up trend.
What will you do if AUD/USD breaks up through 0.7440? (Let's assume a close above 0.7450). Would you argue the technicals are not clear?. Would you argue the fundamentals will overwhelm the technicals?
Or will you buy?