AUD/USD: Zone near 0.5950 will be key
Last Thursday’s signals were not triggered, as there was no bearish price action when the resistance level identified at 0.5808 was reached.
Today’s AUD/USD Signals
Risk 0.75%.
Trades must be entered between 8am New York time Monday and 5pm Tokyo time Tuesday.
Short Trade Ideas
Go short following bearish price action on the H1 time frame immediately upon the next touch of 0.5795 or 1.5962.
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 Ideas
Go long following bullish price action on the H1 time frame immediately upon the next touch of 0.5940 or 1.5500.
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 I thought the outlook continued to look bearish for risky assets such as the AUD, but it was likely that we had seen a firm short-term or even medium-term bottom, so this pair should be watched closely but probably not traded for some hours.
This was a good call insofar as the price made a very strong bullish recovery with high volatility that day, and the bottom made near 0.5500 was not approached again.
The price has settled down now, with volatility decreasing. The key thing to watch for now is whether the new resistance level at 0.5795 continues to hold. We are seeing a bit of a bearish head and shoulders formation here – not a great one, but the action is suggesting a further downwards move. Despite that, there are the first tentative signs in the market today of risk sentiment not deteriorating any further, as well as economic forecasts beginning to emerge from Australia that the coming hit to GDP from the crisis will be considerably lower than the -23% number currently quoted for the USA by Goldman Sachs. These factors just might prevent any further strong decrease over the short-term.
I again think it wise to stand aside from trading this pair for another day, with the exception of a short trade from another rejection of 0.5795 on a short time frame if that sets up later.
There is nothing of high importance scheduled today regarding either the AUD or the USD.