Last Tuesday’s AUD/USD signals were not triggered, as there was insufficiently bearish price action when the price first reached the resistance level at 0.7748.
Today’s AUD/USD Signals
Risk 0.75%.
Trades must be taken prior to 5pm Tokyo time Friday.
Short Trade Ideas
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.7651, 0.7689, or 0.7702.
Put 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 price reaches 20 pips in profit and leave the remainder of the position to run.
Long Trade Ideas
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 0.7555, 0.7498, or 0.7485.
Put 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 price reaches 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 Tuesday that if the price broke below the lower trend line of the narrowing triangle chart formation and the support level which I had identified at 0.7642, that would be a very bearish sign, and the price would be liable to fall quite sharply.
Although this did not happen the same day, it was an accurate description of what started to happen yesterday as global market sentiment turned firmly risk-off, sending the price of this currency pair which tends to act as a key risk barometer quite strongly downwards.
We now see bearish price action dominant and risk-off sentiment persisting into today following the FOMC’s more downbeat language about the challenges facing the U.S. economy as it recovers from the shock of the coronavirus pandemic, and the chance of this recovery persisting into 2021.
Technically, now that the price has cleared the consolidating triangle and associated support, it has plenty of room to fall. I think it will continue downward today and reach at least 0.7555. The support at 0.7498, as it is so confluent with the major round number and psychological level at 0.7500, is likely to be very strong if reached today, and might produce a major bullish reversal.
This downwards movement is quite likely to end over the next few days, so there could eventually be a great long trade opportunity, but for the next few hours trading short is likely to be more successful.
There is nothing of high importance due today regarding the AUD. Concerning the USD, there will be a release of Advance GDP data at 1:30pm London time.