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AUD/USD Forex Signal: Retreating from Yesterday’s 4-Month High

By Adam Lemon

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.

My previous signal on 7th May produced a profitable long trade from the double inside bars rejecting the support level at $0.6590.

Today’s AUD/USD Signals

  • Risk 0.75%
  • Trades must be entered before 5pm Tokyo time Friday.

AUD/USD Signal Today - 16/05: Pullback from High (Chart)

Short Trade Ideas

  • Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of $0.6737, $0.6754, or $0.6775.
  • 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 $0.6629, $0.6590, or $0.6546.
  • 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.

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AUD/USD Analysis

I wrote in my previous forecast on Tuesday last week that the AUD/USD currency pair was looking more bullish. I thought that a bullish bounce at $0.6590 could be a good long trade, if carefully monitored for profit-taking. This was an excellent, profitable call.

The technical picture now shows that after rising to a new 4-month high yesterday, spurred mostly by softer than expected US CPI data released yesterday, the price has fallen back with equal momentum since the Asian session began.

The price may be sitting on new support right now in the $0.6675 area, but it is not yet clear whether this area will be supportive.

There is a fairly tight cluster of three resistance levels above yesterday’s high, while the support below is more spread out.

I think a long trade from a bullish bounce at any support level, especially the one at $0.6629, could be a nice long trade, due to the long-term risk-on trend.

There is nothing of high importance due today regarding either the AUD or the USD.

Ready to trade our daily Forex signals? Check out this list of the best Forex brokers in Australia worth reviewing.

Adam Lemon
About Adam Lemon

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.

 

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