Today’s AUD/USD Signals
Risk 0.50%.
Trades must be entered between 8am and 5pm Tokyo time, over the next 24-hour period only.
Long Trade
Long entry following some bullish price action on the H1 time frame immediately upon the next touch of 0.7164.
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.
Take off 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to ride.
Short Trade
Short entry following some bearish price action on the H1 time frame immediately upon the next touch of 0.7231.
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.
Take off 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to ride.
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
I wrote last Thursday that I would take a bullish bias later if there were a strong bullish reversal at 0.7256. This did not happen and although the price struggled in that area for a while, it broke down to make new long-term lows.
This pair is in an interesting position – the Australian Dollar is the weakest of all the major currencies, and this pair has made new multi-month lows and is close to multi-year lows. There is some evidence of strong buying at the low shown in the price chart below, which is around a multi-year inflection. This could mean that there is a long-term buying opportunity here. Despite that, there is clearly a good chance for bearish momentum to get going again when this short-term bullish movement runs out of energy. At present, 0.7231 looks like attractive resistance, so a short trade there could be very interesting later due to confluence with the bearish trend line shown in the price chart below. Traders need to be careful though, as there is a major release later during the Asian session scheduled for the Australian Dollar from the RBA.
There is nothing important due today concerning the USD. Regarding the AUD, there will be a release of the RBA Rate Statement and Cash Rate at 5:30am London time. It is a public holiday in the U.S.A. today.