My previous signal last Thursday produced a profitable short trade after an hourly pin bar rejected the resistance level which I had identified at 0.6844.
Today’s AUD/USD Signals
Risk 0.75%
Trades must be entered 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 0.6848.
- 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
- Go long following a bullish price action reversal on the 1H1 time frame H1H1H1 time frame immediately upon the next touch of 0.6719 or 0.6683.
- 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 in my previous forecast last Thursday that the AUD/USD currency pair was finding a strong support level at 0.6797, but would be likely to regain some ground before falling again. Therefore, a short trade from a bearish reversal at 0.6844 was the best opportunity I saw. This was a good call as it enabled a profitable short trade from the rejection of 0.6844.
US strength has persisted over the past week, although most currencies have gained against the greenback over the past day. The Australian Dollar is no exception to that, but the gain has been very small. The Reserve Bank of Australia just announced a 0.50% rate hike and released its latest rate statement, but these were not surprises in any way and the market seems to have barely reacted.
The only interesting feature today in this currency pair looks like what seems to be a very strong and pivotal resistance level at 0.6848, which is confluent with the half number at 0.6850. I think the best approach here today will be to wait until this level is reached and see what happens.
If there is a bearish reversal at 0.6848, a short trade should be a good opportunity.
If the price gets established above 0.6848 and rises over a couple of hours, the price will probably rise higher. The bullish case here would be strengthened by the fact we already see the descending trend line broken to the upside, as shown within the price chart below.
In the unlikely event that the price hits 0.6719 before reaching 0.6848, if there is a bullish bounce at the first touch, a long trade could be interesting. This level, like 0.6848, should also be interesting for scalpers.
Regarding the USD, there will be a release of ISM Services PMI data at 3pm London time. Concerning the AUD, there will be a release of GDP data at 2:30am.
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