Good morning team,
I am taking a look at a long trade setup on the AUDUSD this morning. Over the last couple of weeks, risk markets have taken a beating due to interest rate hikes, inflation, geopolitics and specific crypto-related issues. It would be hard to identify just one of them as a reason all assets have declined, it was most likely a combination of everything which has put investors in bearish sentiment. With that said, there has been a lot of pain in the markets, and due to the technical outlook, we see a corrective rally occurring at the minimum over the next couple of days/week. As the saying goes, when others are greedy be fearful, when others are fearful be greedy. At the moment the market is in extreme fear, and we will look to take the contrarian view. We are long the S&P500, and a long trade on the AUDUSD will also be a risk-on position.
AUDUSD 4 Hour Chart
5 waves down to complete a C leg decline, alongside a bullish divergence on the daily time frame.
Trade Setup: BUY market execution, current price 0.6949, stop loss 0.6844 and take profit target 0.7263.
Stop loss: 105 pips
Take profit: 314 pips