Bulls face potentially strong resistance at 0.7271.
Last Tuesday’s AUD/USD signal was not triggered, as there was no bearish price action when the resistance level at 0.7148 was first reached.
Today’s AUD/USD Signals
Risk 0.75%
Trades must be entered before 5pm Tokyo time Wednesday.
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Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.7271, 0.7302, or 0.7321.
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Put the stop loss 1 pip above the local swing high.
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Adjust the stop loss to break even once the trade is 20 pips in profit.
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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 Idea
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Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 0.7123.
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Put the stop loss 1 pip below the local swing low.
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Adjust the stop loss to break even once the trade is 20 pips in profit.
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 Tuesday that the price was established in a consolidation pattern above 0.7083. I thought this support level looked likely to be strong as the US Dollar Index was running into resistance at the same equivalent area, so I saw more potential on the upside here.
This was a good call as the price rose over the day and has continued to rise ever since. In fact, this pair has been a centre of focus for the Forex market in recent days as risk sentiment has risen, with the Australian Dollar the primary beneficiary as a key risk barometer currency, while the US Dollar has been selling off along with the Japanese Yen, although the Japanese Yen is weaker than the Dollar.
Yesterday’s risk rally therefore pushed up the price, which seems to be peaking quite close to the key resistance level I have identified at 0.7271. The technical picture is bullish, but unfortunately, there are no obvious support levels above 0.7123 which is very unlikely to be reached today, and I only want to take a long trade today so I think it may be best to stand aside from trading this currency pair today.
If we see a consolidation continue below 0.7271 and risk sentiment begin to sour on bad news, there may be scope to take a short trade from a bearish reversal at 0.7271 tomorrow or later this week.
There is nothing of high importance scheduled today concerning either the AUD or the USD.
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