There are strong resistance levels overhead.
Last Tuesday’s signals were not triggered, as there was no bearish price action when the resistance level which I had identified at 0.7207 was first reached.
Today’s AUD/USD Signals
Risk 0.75%
Trades may only be entered before 5pm Tokyo time Wednesday.
- Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.7430, 0.7439, 0.7454, or 0.7513.
- 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
- Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 0.7321 or 0.7275.
- 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 last Tuesday that the technical picture had become considerably more bearish now, so I was looking for a short trade from a bearish reversal at either 0.7207 or 0.7259 if either trade set up over the day. This was not a good call as although it was enough to keep out of trouble, the day was an up day and the price continued to rise strongly over the remainder of last week as risk sentiment recovered in the markets, boosting the AUD at the expense of the USD.
This move now seems to have run out of momentum, and we see the US Dollar strengthening everywhere over recent hours, especially against the Japanese Yen, but it should be noted the Australian Dollar is relatively strong. However, this is unlikely to last, as we have three resistance levels nearby starting at 0.7430 which the price has been unable to breach over the past few days. We have seen the price consolidate, and now seeming to be starting to make a crucial drop.
I will definitely look for short trades in this currency pair today. A good swing trade could set up if the price gets back to test 0.7430 and fails there. Another strategy could be to wait for strongly bearish hourly closes below 0.7375 which seems to be the lower boundary of hourly closes for the current consolidative price range.
The support at 0.7321 looks likely to be strong, so it may be wise to take profits at 0.7325.
There is nothing of high importance due today concerning either the AUD or the USD.
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