My previous signal last Monday was not triggered as there was no bullish price action when the price first reached the support levels which I had identified that day.
Today’s AUD/USD Signals
Risk 0.75%
Trades may only be taken before 5pm Tokyo time Tuesday.
Short Trade Idea
- Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.6964 or 0.6993.
- 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 0.6882, 0.6797, or 0.6784.
- 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 on 15th August that if the AUD/USD currency pair could make two consecutive lower hourly closes below the support level at 0.7063, that could be a good short trade entry signal, as the price would then have a lot of room to fall before reaching another support level – the next level is not until 0.7010. I also thought it was a relatively good time to be trading this currency pair as it was in the market’s focus as a key risk barometer,
This was a good call, as following it would have got you in short at 0.7045 until the price began to bottom out, at least temporarily, at about 0.7000, so there was a nice 35 pips of profit available there.
We saw further falls over the week, as risk sentiment continued to sour and the US Dollar made a strong recovery. Friday saw an especially strong move, with the price trading as low as 0.6859. This presented a bearish technical picture as the market opened this week, however we have seen strength in the AUD today and the price was able to break up above the former resistance level at 0.6882 which may now act as support. Yet, I think that the price will probably turn bearish again later, and I doubt that the bullish retracement will make it to the next resistance level at 0.6964, but if it did, that could be a spot for a short trade entry for swing traders.
If the price quickly gets established back below 0.6882, that will be a bearish sign, and then it may become possible for shorter-term traders to sell on rallies on short-term time frames.
There is nothing of high importance due today regarding either the AUD or the USD.
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