Last Thursday’s AUD/USD signal produced a profitable short trade entry from the bearish rejection of the resistance level I identified at 0.7505.
Today’s AUD/USD Signals
Risk 0.75%
Trades may only be entered before 5pm Tokyo time Wednesday.
Short Trade Ideas
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.7524, 0.7548, or 0.7569.
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.
Remove 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to ride.
Long Trade Ideas
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 0.7478 or 0.7437.
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.
Remove 50% of the position as profit when the price reaches 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 last Thursday that although we had a bit of a bearish retracement going on over the short-term, the Australian dollar as a key “risk” currency was likely to be strong and to bounce back later. However, as there were no obvious key support levels until 0.7437, I thought that it would probably be hard to find a good trade opportunity here over that day.
This was a good call as the price moved down over the day before eventually rising, but in a choppy and consolidative way.
The Australian dollar is quite strong, and we have seen the price move up again but begin to falter near the closest resistance level to the current price at 0.7524. It looks doubtful that the price will be able to break this level, so there may be a short trade opportunity here if we get a rejection of that level and a firm bearish candlestick moving down from it.
If the price does break above 0.7524, it will face resistance at the 0.7550 area.
It may well be that the price will consolidate today below 0.7524, and then we will get a more decisive directional movement after the release of key Australian inflation data early in the next Asian session.
There may be better vehicles to trade AUD strength, such as the EUR/AUD currency cross.
Concerning the AUD, there will be a release of CPI (inflation) data at 1:30am London time. There is nothing of high importance scheduled regarding the USD.