My last signal on 2nd May was not triggered as there was no bullish price action when the price first reached the support level which I had identified at $0.6670.
Today’s AUD/USD Signals
Risk 0.75%
Trades must be taken prior to 5pm Tokyo time Friday.
Short Trade Idea
- Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of $0.6847.
- 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 $0.6768, $0.6744, or $0.6705.
- 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 forecast that the AUD/USD currency pair was getting a bullish boost from the recent surprise rate hike by the Reserve Bank of Australia, but that due to the three resistance levels packed quite close together above $0.6712 (until $0.6744), I thought that the price would struggle to advance further today. This was a good call as I was proven to be correct.
The technical picture now is broadly bullish, both in terms of the wider market and the market for this particular currency pair.
The wider factors are the general weakness in the US Dollar, although without much momentum, which is reinforced by yesterday’s slightly lower-than-expected US CPI (inflation) data, and the risk-on rally which is also pushed by this factor, which tends to boost riskier currencies like the Australian Dollar.
The specific bullish technical factors which we see in this pair are:
- The price is contained within a symmetrical bullish price channel, which is shown within the price chart below.
- A confluence of two support levels with the lower trend line of this channel, as well as the half number at $0.6750.
- There is a recent bearish inflection point at $0.6815 but no key resistance level identifiable until $0.6847, meaning the price has plenty of room to rise with the line of least resistance seeming to point upwards.
The bullish case here is quite strong, so today I will seek long trade entries from any firm bullish bounce at either $0.6768 or $0.6744.
Regarding the USD, there will be a release of PPI data at 1:30pm London time. There is nothing of high importance scheduled today regarding the AUD.
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