Last Thursday’s signals produced a profitable short trade following the large bearish engulfing candle driving down from the zone of resistance identified between 0.7506 and 0.7517. The action still looks reasonably bearish but will probably slow down very soon, so it would be prudent to take at least partial profits if that has not already been done.
Today’s AUD/USD Signals
Risk 0.50%.
Trades may only be taken between 8am and 5pm Tokyo time, during the next 24-hour period.
Short Trade 1
- Go short following some bearish price action on the H1 time frame immediately upon the next touch of 0.7461.
- Place the stop loss 1 pip above the local swing high.
- Adjust the stop loss to break even once the trade is 20 pips in profit.
- Remove 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to run.
Long Trade 1
- Go long following some bullish price action on the H1 time frame immediately upon the next touch of 0.7411.
- Place the stop loss 1 pip below the local swing low.
- Adjust the stop loss to break even once the trade is 20 pips in profit.
- Remove 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to run.
The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.
AUD/USD Analysis
Looking at the long-term picture, the price is clearly in a trendless consolidation between approximately 0.7750 and 0.7150. There are quite wide swings from rejections of key support and resistance levels within this pattern of wide, consolidating swings. We might have seen the start of a new bearish leg as a major double top was formed as a rejection of the key psychological area close to 0.7500 towards the end of last week. Further bearish signs were given by the breakdown of the bullish trend line shown in the chart below, as well as a new clear resistance level forming at 0.7461.
There is nothing due today concerning either the AUD or the USD. It is a public holiday in the U.S.A.