AUD/JPY Trading on August 16, 2013: 3/3 ITM

I decided to conclude my week with some more AUD/JPY trading on Markets World.

The only price level I had immediately in play was the daily pivot level (purple line) at 89.258. If you’ve read my blog for some amount of time, you’ll see that daily pivot point trades are a set-up that I like to take frequently, especially when the market moves to that level for the first time in the trading day.

The market made its first move down to the 89.258 pivot point on the 1:20 (AM EST) candlestick, fell through by a couple pips, before coming back up and closing above the level. This, in a price-action sense, is a sign of rejection for me and helps to validate the area as a level worth trading. In this case, the pivot had successfully held as support, so I took a call option on the re-touch of 89.258 on the 1:25 candle. Being I was trading with Markets World for today’s trades, expiries are 5-10 minutes in length, which led to this trade closing on the following candle.

This turned out to be a good trade and won by over six pips. The one thing I like about the AUD/JPY is that it’s almost always moving at a pretty steady clip. Obviously it gets a pretty good boost during the Asian and Australian market hours – the two market economies relevant to the currencies in the pair – and then once the European and U.S. trading world comes into play, it continues on at a strong pace.

The market for the rest of the day was interesting. There really wasn’t so much a trend to speak of, and various support and resistance levels formed, but their robustness wasn’t as good as I would have preferred. If I was being super, super picky I probably wouldn’t have traded anymore that day. But I was able to find set-ups that I felt would be worth taking and had a good probability of working out. The goal, of course, is never to find perfect set-ups, but rather set-ups that have a high probability of working out in favor.

I did not want to trade the 89.397 resistance level (although I had the chance) due to the false breaks that had occurred on the price level’s formation. As you may have heard me say before, false breaks always serve as a warning that price may be likely to breach a support or resistance level in the future.

But I did feel confident in trading the 89.337 support level six pips below it. The market had a slight bias for sustaining an uptrend for over the past hour and the two re-touches of 89.337 had held well on the 3:15 and 3:25 candles. So I decided to take a call option on the re-touch of 89.337 on the 3:30 candle. This trade went against me right off the bat but eventually settled in between the recent six-pip trading range (89.337-89.397) for a four-pip winner.

Two further price levels I decided to mark off going forward were at 89.423 and 89.457, which served as resistance. I did not consider any price levels as support for potential call option set-ups between 89.337 and the daily pivot at 89.258. If the market ever happens to form support or resistance a few pips away from a daily pivot point or an important Fibonacci retracement level (i.e., drawn from price moves on the higher time compressions), it’s usually only a temporary bounce before it will actually hit the level.

I also did not take anymore pivot trades for the day. I was mainly wary of the breach of the pivot that had occurred earlier in the morning and felt that it could possibly happen again and maybe even sustain a downtrend. But the market eventually decided to stay above the pivot level.

I did have 89.423 considered for put options, but nothing cleanly set-up there, so I began targeting up at 89.457 instead, which was around the day’s current high. Sure enough, I was able to find one final trade for the day at the 89.457 level. Price touched it on the 7:15 candle and rejected it. It skipped a touch on the following candle, but I was able to get into the put option on the 7:25 candle and was able to get a winner of just over two pips.

That was it for the day. I spent just Thursday and Friday trading standard binaries from the five-minute chart, but was able to finish a solid 6/7 ITM over those two days on a completely different pair (AUD/JPY).

Next week, I’ll likely go back to my USD/CHF trading on Trade Rush, but I’d also like to include another day of trading 60-second options. I’ve also thought about doing some gold futures binary trading, as well. I did some metals trading in the past because the payouts were very good at Markets World, and it still seems to hold true even under the variable payout structure they presently employ. Plus, I do enjoy mixing things up a bit on occasion. However, for traders just starting out, I do recommend sticking with trading the same asset every day to really learn its general behavior. There is something to be said for having that sense of stability in your trading regimen and trading the same asset can be a very important part of that.