AUD-USD Technical Analysis (24 May 2009)

AUD-USD recent upward movement is one special case that we cannot predict in forex. By right based on weekly slow stochastic and candlestick counting (weekly time frame) it should move down, but in reality it chose to move up (overbought). This is where many traders can fail if they rely too much on their technical indicators and strategies to predict the market direction.

Even though this phenomena happens occasionally but the impact is like losing frequently. At this point you have no idea if the market will continue the overbought or reverse soon. Throughout my long-time observation i have encountered many situations like this and despite of my familiarity with it still i failed to avoid losses when it happens. This is because i just cannot predict when exactly the market will move.

Therefore sometimes i just use my guts feeling to trade and usually close my position if it is not moving according to my expectation after a certain period of time.