BEOB on AUD/USD -11/14/12

After today’s New York close we see a Bearish Outside Bar (BEOB) on the AUD/USD daily chart. There is a lot to like about this price action.

1. Notice how the bar fully engulfs the previous two bars and closes near its low.

2. The bar broken through the big round number of 1.0400.

3. The blue box marks a trading range from 1.02 to 1.06 that the pair had been trading in. Often the middle of a trading range is itself a price pivot zone (PPZ) where you want to look for price action signals. Where is the middle of this range box? Right at BRN 1.0400, which the BEOB broke through.

4. The recent uptrend is marked by the red line. This BEOB has broken through that trendline.

One signal alone does not make a trade worthwhile. All of these signals together, however, provide good evidence that this is a trade to consider. If you were to take this trade you’d want to wait until the bottom of the BEOB has been broken. The first trouble area (FTA) is likely going to be at 1.0300.