AUDUSD analysis: Downtrend but support at 0.6862 pivotal
Yesterday’s signals produced a short trade from the bearish near-doji which rejected the resistance level at 0.6883 during the previous Asian session. This is in a little profit at the time of writing, but the price is not acting right so it would be wise to get out of this short trade at break even.
Today’s AUD/USD Signals
Risk 0.75%.
Trades must be taken from 8am New York time Wednesday until 5pm Tokyo time Thursday.
Long Trades
Long entry following some bullish price action on the H1 time frame immediately upon the next touch of 0.6862 or 0.6827.
Put the stop loss 1 pip below the local swing low.
Move 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 run.
Short Trades
Short entry following some bearish price action on the H1 time frame immediately upon the next touch of 0.6883, 0.6894 or 0.6904.
Put the stop loss 1 pip above the local swing high.
Move 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 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
I wrote yesterday that although there was a strong long-term bearish trend, it seemed that the support level I had identified at 0.6827 was already making its presence felt and providing at least a temporary break in the trend. For this reason, I would only become actively bearish again if the price either retraced to at least 0.6865 before making another bearish turn, or if the price broke below 0.6827 and stayed there for a while and looked like moving down again.
This was a good call, as the price kept rising all the way to the resistance level of 0.6883 before beginning to move down again in line with the trend. The problem for bears is that there is new higher support at 0.6862 and the price does not seem to be in a hurry to move any lower, so it will be wise to be very cautious here before making trades in either direction. I would take a bearish bias if we get a solid bearish break below 0.6862, but only after the FOMC release due later.
Concerning the USD, there will be releases of the FOMC Economic Projections, FOMC Statement, and Federal Funds Rate at 7pm London time, followed half an hour later by the usual press conference. Regarding the AUD, the Governor of the RBA will be giving a minor speech at 3:35am.