Today in forex trading the AUD/USD had a strong selloff. The sell signal from The Forex Heatmap® is shown below. This pair is approaching support at the 0.7515 area, we would scale out lots or exit any short term sells on this pair as the AUD/USD continues down to this price.
When the AUD/USD has strong selloff it is always because one currency is weak and the other currency is strong. Today the AUD was weak and the USD was strong. The same thing in reverse can happen when there is a strong up cycle. This is why The Forex Heatmap® is so valuable. It works for short term buy or sell trades like today, but it also works when entering strong up trends.
In the case of trading with the trend, traders can hold onto their position and ride the trend with the strong entries this tools helps to provide. It is part of our overall trend based trading system. Since the AUD/USD is not trending right now, just cycling between support and resistance, we recommend good money management and scaling out lots. Any forex trader can trade profitably using these principles and tools, parallel and inverse analysis and currency strength are vital to the success of your forex trading program.