AUD/USD: Coming back as risk appetite improves
Yesterday’s signals were not triggered, as there was no bearish price action when the resistance level at 0.7317 was reached.
Today’s AUD/USD Signals
Risk 0.75%.
Trades must be taken between 8 am New York time Tuesday and 5 pm Tokyo time Wednesday.
Long Trade Ideas
- Go long following bullish price action on the H1 time frame immediately upon the next touch of 0.7248 or 0.7229.
- Place the stop loss 1 pip below the lowest recent price.
- 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 Ideas
- Short entry following bearish price action on the H1 time frame immediately upon the next touch of 0.7340, 0.7363, or 0.7379.
- Place the stop loss 1 pip above the highest recent price.
- 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 yesterday that due to the strong consolidation pattern, I was equally ready to take a short trade from a bearish rejection at 0.7317 or a bullish bounce at 0.7248.
I also thought that the RBA release a few hours ago might be the catalyst for a breakout from this range, which was correct – although it was a very weak bullish breakout.
The technical picture is now a little more bullish, which is natural as risk appetite is improving somewhat and the Australian Dollar typically benefits from that. However, there is a lot of worry over the future of Australia’s economic prospects coming more to the fore and that is starting to hold back the Australian Dollar a bit.
Technically, we have a number of quite closely packed resistance levels between 0.7340 and 0.7395, which look likely to make any further significant upwards movement difficult.
I think the price is likely to end the day higher, but the bullish movement looks risky and prone to reversal. Therefore, I will only be comfortable taking a long trade from a bullish bounce at a key support level.
There is nothing of high importance due today regarding either the USD or the AUD.