Reader “Bozo on a bus” notes that the Australian Dollar ETF, FXA, has been beaten-down and now has extremely negative sentiment. As a result, a snapback trade may make sense.
Observing the monthly chart for the Aussie Dollar ETF, below, you can see the clear symmetrical triangle breakdown this May. I can surely see why sentiment turned negative–The potential for a fresh bear market is apparent.
Last month, though, the Aussie printed a monthly “inverted hammer” candlestick, potentially a reversal, and is having a strong September thus far. If you are looking to push the snapback momentum on the long side, I think the key to the trade is a firm stop below September’s lows, about $90. You do not want to get swept up in another leg lower in this breakdown.
On the upside, with a target of just above $100 (scene of the breakdown) you can justify the risk/reward to the aggressive trade idea.
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i inverted a hammer up my ass once, had to use a candlestick to find that thing after the fact
LOL – A Real Amish wouldn’t do that