AUDUSD: Weakly bullish but resistance at 0.6940
Last Thursday’s signals produced a nicely profitable long trade from the bullish engulfing candlestick which rejected the support level at 0.6861 on the hourly chart. This may go further but watch carefully for a bearish reversal at or below the resistance level at 0.6940.
Today’s AUD/USD Signals
Risk 0.75%.
Trades must be taken from 8am New York time Monday to 5pm Tokyo time Tuesday.
Short Trade Idea
Go short following bearish price action on the H1 time frame immediately upon the next touch of 0.6940.
Place 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.
Long Trade Idea
Go long following bullish price action on the H1 time frame immediately upon the next touch of 0.6882.
Place 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.
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 there was no trend and bulls and bears were quite evenly balanced.
I thought that the best approach was probably going to be scalping bounces off either support or resistance levels on short time frames and being very careful not to stay too long in any trade.
This wasn’t a good call, as I should have had more faith in the support at 0.6861 and that there were signs of a weak but real long-term bullish trend.
The picture now looks more bullish, but the price is approaching an important long-term resistance level at 0.6940 which could be a very profitable place to enter a short trade. However, the support at 0.6882 could be good for another long trade too if the price gets back there before reaching at least 0.6925 first.
I expect the price to keep rising over the short-term, but to fail to clear 0.6940 until Thursday or Friday later this week at the earliest.
There is nothing of high importance due today regarding either the AUD or the USD.