The AUDUSD W Reversal

One of the interesting currency setups over the last few days has been the potential ‘W’ Bollinger reversal that has been building on the AUDUSD. In these you are looking for a trough outside the Bollinger Bands and a subsequent trough developing within the Bollinger Bands. As you can imagine this is an attempt to isolate instruments that are seeing a cooling in the direction of the trend.

The W Reversal continues - Waiting on the trough

I find these reversal setups interesting – another good example can be found in John Carter’s book “Mastering the Trade”. This is a method he refers to a “HOLP and LOHP” and is worth a look. Both methods employ an initial stop above/below the high/low of the peak/trough. You need to remember the spread in these calculations though as otherwise you may get stopped out earlier than you thought you would.

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