Simple's Green Room

[pennies2007]

Here's a simple formula for you Qui...

Find the larger trend on a large time frame. Measure the length of the counter trend moves...the ones that go "against the grain". Make notes of those moves on your chart.

Then, when price action makes a counter trend move back to those same movement lengths, take a small trade to go back in the larger direction, with expectations that, at the very least, you'll retest the lows or highs and, more likely, you'll see new lows or highs depending on what larger trend direction you're trading.

Only when you get a single larger counter trend move that's at least 40 to 50% larger than the others can you say that a bottom may be forming soon. And even then, price action will move in the larger direction one last time to make a final high or low in the larger direction before price can really reverse.

Check any chart you like, especially the larger time frames, and you'll see what I mean.

Now, with that in mind, here's the AU daily chart again...