Thursday 17 September 2009

Which is more important? Trend direction or Support/Resistance?

Many traders grapple with this all the time. To me it’s clear. The “trend is the trend” because it continues on and blows through supports in a downtrend and resistances in an uptrend.

A current example of this is AUD/USD. Get ready for the AUD/USD to break higher as the “bottom and top pickers” try to short this pair soon (since they are believers that the resistance will hold). The trend traders will get the last laugh, as the top pickers get caught on the wrong side of the market and have to scramble to cover their losing positions which only “fuels the fire” for the trend trader

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