My last signal from 22nd March was not triggered, as there was no bearish price action when each of the resistance levels which I had identified were first reached.
Today’s AUD/USD Signals
Risk 0.75%
Trades must be taken prior to 5pm Tokyo time Wednesday.
Short Trade Ideas
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.7636 or 0.7649.
- 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
- Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 0.7569, 0.7548, or 0.7536.
- 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 in my previous piece on this currency pair on 22nd March that the recent price rise seemed to have run out of momentum, so I was looking for short trades in this currency pair that day. I thought that s good swing trade could set up if the price got back to test 0.7430 and failed there.
This call was enough to keep anyone out of trouble, but I was quite wrong about direction, with the day being a strong up day after the price broke out above 0.7430.
The technical picture is now much more bullish, with the price breaking upwards very strongly on high volatility immediately after the RBA’s Rate Statement was released, to trade at a new 9-month high price. The Australian Dollar is unquestionably the strongest major currency right now.
This initial bullish spike, at the time of writing, is running into the round number at 0.7600 which might halt its advance, but it is too early to say.
This upwards movement right now is driven not by the RBA’s Cash Rate, which remained unchanged as expected at 0.1%, but by the Rate Statement, in which the Bank continues to see a tightening labour market and rising earnings, which implies that bearish pressure on the Bank to begin to look to hike rates is rising.
This market is ripe for day traders to trade long on shorter time frames, buying dips as they turn to rise, while being careful to take profit before the rise runs out of steam. It might go all the way to the next resistance level at 0.7636, or even 0.7650.
Over the medium-term, I see a retracement to 0.7569 as likely to provide the best potential entry point for a long trade if there is bullish bounce there in the price action.
Concerning the USD, there will be a release of ISM Services PMI data at 3pm London time. There is nothing of high importance due today regarding the AUD.