Yesterday we highlighted some key daily Aussie Dollar resistance levels.
You can of course go through each of the forex pairs that were featured in that post on your own MT4 platform. Check out the daily resistance zones and then zoom in and look for areas that you could have shorted.
But I’ll just highlight one of the Aussie pairs featured, in AUD/JPY:
From here the safest play is to wait and see if the higher time frame level holds, and then to sell any short term pull backs.
Sure, you could just blindly sell the higher time frame resistance. If you sold anywhere in that zone, your drawdown would have been minimal and you’d be sitting pretty in profit right now.
But by waiting the pullback, you not only have confirmation that the higher time frame level has in fact held, but you are able to tighten your risk:reward ratio as tight as you possibly can.
So zooming into an intra-day chart, you can see the pullbacks that I’m referencing:
Certainly plenty of chances depending on what you constitute as confirmation.
Now, conservative entries vs getting in early so as not to miss the boat as the old saying goes, is an age old question which you are never going to get a definitive answer to. It’s cliche, but every person is different and their trading style has to match their personality.
For me, I wait for that pullback. Too many times have I sold what I thought to be a resistance zone, only for momentum to take price right on through. I would say:
“But it’s resistance, price has to stop…”
No, it really doesn’t. The market doesn’t care what I think is resistance. I don’t know anything more than any other trader scrapping about for a few entries per day!
Don’t ever forget your place in this immense market that we trade. By being patient and conservative on my entries, I don’t open myself up to those expectations not being met when a level doesn’t hold.
I hope you take something from the levels that I feature on the blog each day. Enjoy your weekend!
Dane Williams – @VantageFX
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