AUDUSD Structure breakout short trade – 08th Feb 2016

AUDUSD structure breakout trade setup was spotted on H4 time frame. Given the market volatility today, especially with the USD tanking so much, this might come to you as a surprise. But the thing with structures and breakouts is that you don’t want to miss when opportunities present itself.

One of my strategies in relation to Elliott wave theory and wave counting, is to trade structures. I like breakout trades from corrective structures as they yield the highest possible risk to reward ratios. If you can spot a corrective structure and anticipate the end of the correction, technically you are trading the next impulse.

What better way is there to get amazing R:R.

AUDUSD structure breakout trade

audusd structure breakout

As you can see my stop-loss is just 63 pips and the target is at 1.272% fib extension of the previous impulse – a total of 392 pips. There is a good chance that I might be taken out for a small hit. But if it breaks now, I want to be in the trade.

The corrective structure completed is an expanding diagonal consisting of a double three WXY pattern. This type of correction pattern is also famously called a bear flag.

Expanding ending diagonal AUDUAD structure breakout 08th Feb

Could it make another ABC move up? Sure. It can continue the correction to complete a triple three combo structure. This double three combination of the bear flag will be confirmed only when the price will break out of structure.

With this much of analysis backing up a possible AUDUSD-structure-breakout, its impossible to pass on the opportunity. If I were trading fundamentals or correlation, then this trade would have been a huge no-no. But over the course of time, I have learned that structures and wave patterns, they just work.

It is in fact an amazing phenomena that fundamentals somehow line up with the overall wave structures; and wave patterns continue to appear regardless. This AUDUSD structure breakout too seems as a risky prospect, given the volatility of the markets today.

Don’t be fooled by the market manipulation. There is no better way to forecast next impulse moves, than the wave theory. If you understand and trade structures, then you also know how probable this AUDUSD-structure-breakout trade is.

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